TTW, a Moldovian company, began business on 1 October 2020. Among its varied activities, TTW owns...

  

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TTW, a Moldovian company, began business on 1 October 2020. Among its varied activities, TTW owns a building which it leases out to a third party. Its pre-tax profits for the first two financial years are as follows: $1,240,000 Year ended 31 March 2021: Year ended 31 March 2022: $2,560,000 The applicable corporate tax rate is 30%. The following items give rise to the only differences between its tax calculated on these pre-tax profits and its income for tax assessment purposes: On 1 April 2021, the company received $240,000 in rent from another organisation to whom it leased premises. Of this amount, $80,000 was for rent for the period 1 October 2020 to 31 March 2021, and the rest was for the period 1 April 2021 to 31 March 2022. The $1,240,000 profit for the year ended 31 March 2021 only includes the $80,000 rent receivable accrued for the period. Under Moldovian tax law, the company was obliged to include the entire amount received on 31 March 2021 in its 31 March 2021 tax return. The company incurred expenses of $10,000 and $15,000 for entertainment expenses in 2020-21 and 2021-22 respectively. These expenses are non-deductible for tax purposes. In 2020-21 and 2021-22, the company reported its accrued long service leave liability in the balance sheet as $40,000 and $50,000 respectively. Payment of this accrual is provided for in the company's cash flow forecasts for each of the three years from 1 October 2022. For tax purposes, long service leave is deductible as it is paid. TTW, a Moldovian company, began business on 1 October 2020. Among its varied activities, TTW owns a building which it leases out to a third party. Its pre-tax profits for the first two financial years are as follows: $1,240,000 Year ended 31 March 2021: Year ended 31 March 2022: $2,560,000 The applicable corporate tax rate is 30%. The following items give rise to the only differences between its tax calculated on these pre-tax profits and its income for tax assessment purposes: On 1 April 2021, the company received $240,000 in rent from another organisation to whom it leased premises. Of this amount, $80,000 was for rent for the period 1 October 2020 to 31 March 2021, and the rest was for the period 1 April 2021 to 31 March 2022. The $1,240,000 profit for the year ended 31 March 2021 only includes the $80,000 rent receivable accrued for the period. Under Moldovian tax law, the company was obliged to include the entire amount received on 31 March 2021 in its 31 March 2021 tax return. The company incurred expenses of $10,000 and $15,000 for entertainment expenses in 2020-21 and 2021-22 respectively. These expenses are non-deductible for tax purposes. In 2020-21 and 2021-22, the company reported its accrued long service leave liability in the balance sheet as $40,000 and $50,000 respectively. Payment of this accrual is provided for in the company's cash flow forecasts for each of the three years from 1 October 2022. For tax purposes, long service leave is deductible as it is paid.

Answer rating: 100% (QA)

SOLUTION To calculate the taxable income and tax payable for TTW for the financial years ended 31 Ma... View the full answer