Metro Sdn. Bhd. had commenced a business of manufacturing air-conditioners on 1 July 2017 and had...

 

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Metro Sdn. Bhd. had commenced a business of manufacturing air-conditioners on 1 July 2017 and had prepared its first set of accounts to 30 June 2018, and subsequently to 30 June each year. For the year ended 30 June 2021, the company has incurred the following capital expenditures: (i) Construction of a factory building RM Cost of land 500,000 8,000 Legal fees for - agreement for purchase of land - agreement with contractor for the construction of factory building 7,000 Architect's fees 10,000 Piling and foundation works 20,000 800,000 Cost of construction The building was completed and used for the purpose of its manufacturing business in January 2021. 20% of the building was used as office space. Machine A RM Cost of machine 420,000 33,600 Cost of alteration to the existing building for the installation of the machine Cost of installation of the machine 3,600 (iii) Office equipment RM Fax machine Office cabinet 1,500 1,000 During the year ended 30 June 2021, the company director's car, costing RM180,000, was involved in an accident which caused a total loss The company received insurance compensation of RM90,000. The car was acquired in December 2018. Required: (a) Compare and explain the difference between the tax treatments for small value assets and assets claimed on a replacement basis. (8 marks) (b) Compute the industrial building allowance, capital allowance and balancing adjustment in respect of all the above non-current assets of Metro Sdn. Bhd. for the year of assessment 2021. (12 marks) [Total: 20 marks] Metro Sdn. Bhd. had commenced a business of manufacturing air-conditioners on 1 July 2017 and had prepared its first set of accounts to 30 June 2018, and subsequently to 30 June each year. For the year ended 30 June 2021, the company has incurred the following capital expenditures: (i) Construction of a factory building RM Cost of land 500,000 8,000 Legal fees for - agreement for purchase of land - agreement with contractor for the construction of factory building 7,000 Architect's fees 10,000 Piling and foundation works 20,000 800,000 Cost of construction The building was completed and used for the purpose of its manufacturing business in January 2021. 20% of the building was used as office space. Machine A RM Cost of machine 420,000 33,600 Cost of alteration to the existing building for the installation of the machine Cost of installation of the machine 3,600 (iii) Office equipment RM Fax machine Office cabinet 1,500 1,000 During the year ended 30 June 2021, the company director's car, costing RM180,000, was involved in an accident which caused a total loss The company received insurance compensation of RM90,000. The car was acquired in December 2018. Required: (a) Compare and explain the difference between the tax treatments for small value assets and assets claimed on a replacement basis. (8 marks) (b) Compute the industrial building allowance, capital allowance and balancing adjustment in respect of all the above non-current assets of Metro Sdn. Bhd. for the year of assessment 2021. (12 marks) [Total: 20 marks]

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A Small value assets are those that cost less than 500 Th... View the full answer