FB Ltd is a wholesaler of stationery in Hong Kong. It makes up its accounts to...

 

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FB Ltd is a wholesaler of stationery in Hong Kong. It makes up its accounts to 31 March annually. It has two full-time executive directors, Mr Chan and Mr Lee. Its statement of comprehensive income for the year ended 31 March 2012 is as follows: Gross profit Dividend (Note a) Rental income (Note b) Compensation received (Note c) Less: Directors' remuneration (Note d) Salaries and allowances Annual contributions to MPF scheme (Note e) Rent & rates (Note f) Auditor's fee Impairment loss (Note g) Bank interest (Note h) Motor vehicles expenses (Note i) Repairs (Note j) (d) Donations (Note k) Overseas travel (Note I) Net profit Notes: (a) (b) (e) Entertainment Water and electricity Depreciation Printing & stationery General expenses (Note m) Compensation for loss of motor vehicle Compensation for loss of trading stock Mr Chan Mr Lee Contributions in respect of: 1,800,000 3,200,000 508,000 433,000 50,000 170,000 480,000 Mr Chan (20% on remuneration) Mr Lee (18% on remuneration) Other employees (5% on remuneration) 130,000 520,000 350,000 Dividend from the company's subsidiary in Hong Kong. Property A in Hong Kong Property B in Mainland China 100,000 220,000 80,000 170,000 30,000 600.000 8,576,000 30,000 240,000 70,000 8,916,000 8.841.000 75,000 180,000 60,000 240.000 50,000 20,000 70.000 1,200,000 600,000 1.800.000 240,000 108,000 160,000 508,000 2 (f) (g) (h) (1) () (1) (m) (n) Rent for office premises Rent for Mr Chan's residence Rates for office premises Rates for Property A Rates for Property C (see Note n) Impairment loss 100,000 General debt b/f 60,000 SCI 120,000 280.000 General debt is based on 3% of debtors. Trade debts written off Loan to staff written off General debt c/f Mortgage loan interest to a local bank. The loan is used to finance the purchase of Property C. It is secured by Property C (see Noten). Bank overdraft interest on company's current account. The overdraft is secured by director's personal guarantee. Interest on loan from Mr Chan Fines Car parking fees Petroleum Renovation expenditure on office premises Decoration of Property C (see Noten) Repairs of motor vehicles Cash donations to various charitable organisations Business trips Overseas trips for staff of the company 120,000 290,000 16,000 3,000 4,000 433.000 110,000 170,000 280,000 250,000 200,000 30,000 480.000 9,000 80,000 41,000 130,000 200,000 300,000 20,000 520,000 30,000 70,000 100.000 All general expenses are allowable. It is agreed that the depreciation allowance for the year of assessment 2011/12 is $570,000. Based on the above information, compute the profits tax payable by FB Ltd for the year of assessment 2011/12. Ignore provisional profits tax. All workings must be shown. Question 2 (10 marks) SPA Limited is a company carrying on a business in Hong Kong selling antique furniture. The company makes up its accounts to 31 December each year. The movement of the fixed assets for the year ended 31 December 2015 are as follows: Cost as at 1 January 2015 Additions Disposals Balance as at 31 December 2015 Proceeds from disposal *not classified as prescribed fixed asset Furniture & Fixture $ 395,000 100,000 495,000 160,000 335,000 20% pool: $16,500 30% pool: $41,300 25,000 Machinery * $ The following annual allowance rates are applicable to assets: Furniture & Fixture: 20% Machinery: 30% Motor vehicles: 30% 123,000 20,000 143,000 0 143,000 Motor vehicles $ 550,000 130,000 680,000 200,000 480,000 The tax written down values of plant and machinery brought forward from the year of assessment 2014/15 were as follows: 81,000 Required: Calculate the amount of depreciation allowance of plant and machinery available to SPA Limited for the year of assessment 2015/16. FB Ltd is a wholesaler of stationery in Hong Kong. It makes up its accounts to 31 March annually. It has two full-time executive directors, Mr Chan and Mr Lee. Its statement of comprehensive income for the year ended 31 March 2012 is as follows: Gross profit Dividend (Note a) Rental income (Note b) Compensation received (Note c) Less: Directors' remuneration (Note d) Salaries and allowances Annual contributions to MPF scheme (Note e) Rent & rates (Note f) Auditor's fee Impairment loss (Note g) Bank interest (Note h) Motor vehicles expenses (Note i) Repairs (Note j) (d) Donations (Note k) Overseas travel (Note I) Net profit Notes: (a) (b) (e) Entertainment Water and electricity Depreciation Printing & stationery General expenses (Note m) Compensation for loss of motor vehicle Compensation for loss of trading stock Mr Chan Mr Lee Contributions in respect of: 1,800,000 3,200,000 508,000 433,000 50,000 170,000 480,000 Mr Chan (20% on remuneration) Mr Lee (18% on remuneration) Other employees (5% on remuneration) 130,000 520,000 350,000 Dividend from the company's subsidiary in Hong Kong. Property A in Hong Kong Property B in Mainland China 100,000 220,000 80,000 170,000 30,000 600.000 8,576,000 30,000 240,000 70,000 8,916,000 8.841.000 75,000 180,000 60,000 240.000 50,000 20,000 70.000 1,200,000 600,000 1.800.000 240,000 108,000 160,000 508,000 2 (f) (g) (h) (1) () (1) (m) (n) Rent for office premises Rent for Mr Chan's residence Rates for office premises Rates for Property A Rates for Property C (see Note n) Impairment loss 100,000 General debt b/f 60,000 SCI 120,000 280.000 General debt is based on 3% of debtors. Trade debts written off Loan to staff written off General debt c/f Mortgage loan interest to a local bank. The loan is used to finance the purchase of Property C. It is secured by Property C (see Noten). Bank overdraft interest on company's current account. The overdraft is secured by director's personal guarantee. Interest on loan from Mr Chan Fines Car parking fees Petroleum Renovation expenditure on office premises Decoration of Property C (see Noten) Repairs of motor vehicles Cash donations to various charitable organisations Business trips Overseas trips for staff of the company 120,000 290,000 16,000 3,000 4,000 433.000 110,000 170,000 280,000 250,000 200,000 30,000 480.000 9,000 80,000 41,000 130,000 200,000 300,000 20,000 520,000 30,000 70,000 100.000 All general expenses are allowable. It is agreed that the depreciation allowance for the year of assessment 2011/12 is $570,000. Based on the above information, compute the profits tax payable by FB Ltd for the year of assessment 2011/12. Ignore provisional profits tax. All workings must be shown. Question 2 (10 marks) SPA Limited is a company carrying on a business in Hong Kong selling antique furniture. The company makes up its accounts to 31 December each year. The movement of the fixed assets for the year ended 31 December 2015 are as follows: Cost as at 1 January 2015 Additions Disposals Balance as at 31 December 2015 Proceeds from disposal *not classified as prescribed fixed asset Furniture & Fixture $ 395,000 100,000 495,000 160,000 335,000 20% pool: $16,500 30% pool: $41,300 25,000 Machinery * $ The following annual allowance rates are applicable to assets: Furniture & Fixture: 20% Machinery: 30% Motor vehicles: 30% 123,000 20,000 143,000 0 143,000 Motor vehicles $ 550,000 130,000 680,000 200,000 480,000 The tax written down values of plant and machinery brought forward from the year of assessment 2014/15 were as follows: 81,000 Required: Calculate the amount of depreciation allowance of plant and machinery available to SPA Limited for the year of assessment 2015/16.

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