Noble Manufacturers Ltd., a large-scale manufacturing company has provided you with the following information for the year ended 31 December 2021.

	Sh'000	Sh'000
Gross sales		48,000
General expenses	3,900
Directors Fees	7,200
Depreciation	10,400
Salaries and wages	4,600
Donations to Mayor's campaign kitty	820
Interest Expenses	6,200
Dividends paid	4,605
Repairs and Maintenance	6,250
		43,975
Net Profit		4,025

 

Additional Information:

1. On I January 2021, Roble Manufacturers Ltd. Purchased the factory from Kikope Ltd., a registered contractor for Ksh. 500 Million. Kikope Ltd., availed the following information concerning the cost of construction of the factory:

	Sh'000
Acquisition of land	25,000
Demolition of old buildings on site	19,000
Labour quarters built on site	60,000
Factory Buildings	190,000
Stone perimeters wall around the factory	30,000
Bank Interest paid during the period of Construction	56,000
Total	380,000

 

2. The factory housed a warehouse costing Kshs 17,000,000, administration block costing Kshs 50,000,000 and showroom costing Kshs 25,000,000. Roble Manufacturers Ltd. installed machinery costing Kshs 200,000,000 on 2 January 2021 and started manufacturing animal feed.
3. The following additional assets were acquired during the year ended 31 December 2021:

Date	Asset	Sh'000
Jan-05	Scanner	620
Feb-12	Furniture and Fittings	820
Mar-15	Computers	2,250
Apr-14	Motorcycles	190
Jun-14	Special maintenance tools	36
Jul-18	LED Screen	48
Jul-21	3 Saloon cars (1600 each)	4,800
Oct-26	2 lorries 4 tons  (4000 Each)	8,000
	Total	16,764

 

4. The written down values brought forward for capital allowance purposes as on 1 January 2021 were as follows:

Machinery Sh’000	Computers  Sh’000	Motor-vehicles Sh’000	Furniture & Fittings  Sh’000
8,310	6,415	6,680	4,990

 

Required:

Compute for Roble Manufacturers Ltd. For the year ended 31 December 2021:

1. The capital allowances                                                                             (15 marks)
2. Taxable profit                                                                                           (10 marks)

Answer rating: 100% (QA)

The Capital Allowances Capital allowance is a deduction from the taxable profits of a business It is allowed for certain expenditure on qualifying ass... View the full answer