Kaman Sdn Bhd was incorporated in Malaysia with a paid-up ordinary share capital of RM5 million....

   

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Kaman Sdn Bhd was incorporated in Malaysia with a paid-up ordinary share capital of RM5 million. It is 80% owned by Malaysian citizens. Kaman Sdn Bhd's Statement of Profit or Loss for the financial year ended 31 December 2020 is shown below: Note RM'000 RM'000 Revenue 37,000 Cost of sales 1 (7,700) 29,300 Gross profit Other income 2 2,000 27,300 Less: Staff costs 8,010 Travelling and entertainment expenses 2,100 Advertisement and promotion Repair and maintenance 2,200 490 Professional fees 7 340 Lease rental 20 Cash donation to Govemment 1,000 Depreciation Net Profit before taxation 1,530 (15,690) 11,610 Note: 1. Cost of sales includes: Payment for R&D services to an approved research institution RM125,000 2. Other income comprises the following: RM'000 263 Gain on foreign exchange - realized (non-trade) Gain on foreign exchange – unrealized (trade) Rental received from vacant land rented out to a third party Gain on disposal of property, plant and equipment Interest from fixed deposit placed in a local bank in Malaysia 237 53 41 302 3. Staff costs included the followings: RM'000 Salaries in respect of disabled employees Contribution to Employees Provident Fund (EPF) (employer's contribution at 12%) Contribution to EPF in respect of disabled employees (employer's contribution at 12%) Staff training (paid to a local resident) 126 520 14 1,125 4. Travelling and entertainment included the followings: RM'000 Entertainment existing customers Cash sponsorship for customers' annual dinner Toll, mileage and parking 200 160 151 5. Advertisement and promotions included: RM'000 Congratulatory advertisement in respect of customers Donation to non-approved institutions Market research on customer profile 150 200 320 6. Repair and maintenance included: RM'000 Replacing cement floor with tiles in administration office Installing new cabinets in administration office 44 102 7. Professional fees included: RM'000 Tax fees for the submission of YA 2019 tax retun (paid in YA2020 ) Secretarial fees for YA 2020 (paid in YA 2020) Statutory audit fee 14 11 17 8. Lease rental comprises payment for the lease of a car. The cost of the car is RM200,000. The lease commenced on 1 Janmuary 2019 and rental payment of RM20,000 was made for the year ended 31 December 2019. Kaman Sdn Bhd made another rental payment of RM20,000 for the year ended 31 December 2020. 9. Other information: a. During the year, Kaman Sdn Bhd received an advanced payment of RM1,100,000 from an existing customer for future supply of products. The advance payment is refundable if the customer decides not to proceed with the purchase. The advance receipt is reflected in Kaman Sdn Bhd's Balance Sheet. b. Property, Plant and Equipment (PPE) owned by Kaman Sdn Bhd: Qualifying Cost Tax Written Rate of Annual Down Value RM'000 Allowance RM'000 25,000 12,000 8,000 2,500 3,000 * 15% of the factory area was used as administration office. Land Factory Plant and machinery Fumiture and fittings Motor vehicles 9,360 1,920 1,000 14 10 20 During the year: ) Fumiture and fittings were acquired from a subsidiary company of Kaman Sdn Bhd in Malaysia for RM300,000. This was a controlled transfer. The original cost and the tax written down value of the fumiture and fittings were RM500,000 and RM250,000 respectively. (1i1) Plant and machinery costing RM150,000 was disposed of for RM110,000. The tax written down value of the plant and machinery was RM36,000. Required: Starting with Net profit before taxation, compute the tax payable of Kaman Sdn Bhd for the YA 2020, showing all the relevant adjustments including the capital allowance calculations. (Note : Every item mentioned in the notes to the accounts must be listed in your computation irrespective of whether an adjustment is required or not. Where no adjustment is required, indicate NIL' in the appropriate column). (30 marks) Kaman Sdn Bhd was incorporated in Malaysia with a paid-up ordinary share capital of RM5 million. It is 80% owned by Malaysian citizens. Kaman Sdn Bhd's Statement of Profit or Loss for the financial year ended 31 December 2020 is shown below: Note RM'000 RM'000 Revenue 37,000 Cost of sales 1 (7,700) 29,300 Gross profit Other income 2 2,000 27,300 Less: Staff costs 8,010 Travelling and entertainment expenses 2,100 Advertisement and promotion Repair and maintenance 2,200 490 Professional fees 7 340 Lease rental 20 Cash donation to Govemment 1,000 Depreciation Net Profit before taxation 1,530 (15,690) 11,610 Note: 1. Cost of sales includes: Payment for R&D services to an approved research institution RM125,000 2. Other income comprises the following: RM'000 263 Gain on foreign exchange - realized (non-trade) Gain on foreign exchange – unrealized (trade) Rental received from vacant land rented out to a third party Gain on disposal of property, plant and equipment Interest from fixed deposit placed in a local bank in Malaysia 237 53 41 302 3. Staff costs included the followings: RM'000 Salaries in respect of disabled employees Contribution to Employees Provident Fund (EPF) (employer's contribution at 12%) Contribution to EPF in respect of disabled employees (employer's contribution at 12%) Staff training (paid to a local resident) 126 520 14 1,125 4. Travelling and entertainment included the followings: RM'000 Entertainment existing customers Cash sponsorship for customers' annual dinner Toll, mileage and parking 200 160 151 5. Advertisement and promotions included: RM'000 Congratulatory advertisement in respect of customers Donation to non-approved institutions Market research on customer profile 150 200 320 6. Repair and maintenance included: RM'000 Replacing cement floor with tiles in administration office Installing new cabinets in administration office 44 102 7. Professional fees included: RM'000 Tax fees for the submission of YA 2019 tax retun (paid in YA2020 ) Secretarial fees for YA 2020 (paid in YA 2020) Statutory audit fee 14 11 17 8. Lease rental comprises payment for the lease of a car. The cost of the car is RM200,000. The lease commenced on 1 Janmuary 2019 and rental payment of RM20,000 was made for the year ended 31 December 2019. Kaman Sdn Bhd made another rental payment of RM20,000 for the year ended 31 December 2020. 9. Other information: a. During the year, Kaman Sdn Bhd received an advanced payment of RM1,100,000 from an existing customer for future supply of products. The advance payment is refundable if the customer decides not to proceed with the purchase. The advance receipt is reflected in Kaman Sdn Bhd's Balance Sheet. b. Property, Plant and Equipment (PPE) owned by Kaman Sdn Bhd: Qualifying Cost Tax Written Rate of Annual Down Value RM'000 Allowance RM'000 25,000 12,000 8,000 2,500 3,000 * 15% of the factory area was used as administration office. Land Factory Plant and machinery Fumiture and fittings Motor vehicles 9,360 1,920 1,000 14 10 20 During the year: ) Fumiture and fittings were acquired from a subsidiary company of Kaman Sdn Bhd in Malaysia for RM300,000. This was a controlled transfer. The original cost and the tax written down value of the fumiture and fittings were RM500,000 and RM250,000 respectively. (1i1) Plant and machinery costing RM150,000 was disposed of for RM110,000. The tax written down value of the plant and machinery was RM36,000. Required: Starting with Net profit before taxation, compute the tax payable of Kaman Sdn Bhd for the YA 2020, showing all the relevant adjustments including the capital allowance calculations. (Note : Every item mentioned in the notes to the accounts must be listed in your computation irrespective of whether an adjustment is required or not. Where no adjustment is required, indicate NIL' in the appropriate column). (30 marks)

Answer rating: 100% (QA)

Description Reason Amount in RM Net profit before taxation Given 11610 Add back disallowances Payment to R D to approved research institution Allowed ... View the full answer