Question 1 Thomas, a sole proprietor, operates a logistic business in Hong Kong. The business prepares...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 1 Thomas, a sole proprietor, operates a logistic business in Hong Kong. The business prepares its accounts to 31 August each year. The following information is provided in respect of fixed assets during the three years ended 31 August 2018. 1. The tax written-down values of the business's fixed assets brought forward to the year of assessment 2016/17: 20% 30% $328,000 $75,000 2. A batch of second-hand office furniture was acquired for $9,000 on 15 September 2015. 3. On 1 December 2015, a motor van was purchased on the following hire-purchase terms: Cash price $180,000 Down payment Balance Interest 20% By 12 equal month instalments of $13,500 each commencing in January 2016 At a flat rate on the initial balance of cash price 4. The company acquired a bar coding machine (30%) for a cost of $48,000 on 20 August 2016. The company paid a deposit of $10,000 on 20 August 2016 and the remaining balance of $38,000 would not be payable until the machine was delivered and properly installed by the vendor on 8 September 2016. 5. The 30% pool includes a motor car which has occasionally been used by Thomas's wife for private purposes since 1 January 2017. The portion of private use for the whole year has been agreed with the Inland Revenue to be 30% (also 30% for the next year). The cost of the car was $156,000 in May 2014. The estimated market value of the car was $79,000 on 1 January 2017. 6. An air-conditioner (20%) was acquired for $11,000 on 31 March 2017. 7. An old packaging machine (20%) was scrapped for $12,000 on 9 June 2017. The packaging machine was purchased in February 2012 at a cost of $70,000. 8. Old curtains and carpets were replaced for $21,000 in July 2017 9. On 1 February 2018, a packaging machine (20%) was purchased on hire-purchase terms as follows: Cash price $74,000 Down payment $10,000 16 equal monthly instalments of $4,500 per month with payment due on 15th of each month commencing in March 2018. Interests are fixed for each instalment. 10. On 1 March 2018, Thomas transferred his old private car (not previously used for business) to his business for use in the business. His car was purchased on 1 November 2014 for $150,000. Its second-hand value on 1 March 2018 was $42,000. 11. An antique clock (20%) used in the office was sold for $21,000 on 18 May 2018. It was purchased at $16,000 in October 2010. 12. A computer software was installed at a cost of $28,000 in August 2018. Construction of a new workshop The company constructed a workshop in its leased factory in March 2017 at a cost of $1,280,000. The construction was completed in April 2017 and the company was able to use the workshop for its business from May 2017. In November 2017, capital expenditure of $260,000 was incurred on further improvements of the workshop. Required: Compute the depreciation allowances for Thomas's business for the year of assessment 2016/17, 2017/18 and 2018/19. Notes on specific items are not required. Hint: The basis period of the business is different from the year of assessment. You should allocate the transactions to the different years of assessment based on the basis period, not based on March 31. Question 1 Thomas, a sole proprietor, operates a logistic business in Hong Kong. The business prepares its accounts to 31 August each year. The following information is provided in respect of fixed assets during the three years ended 31 August 2018. 1. The tax written-down values of the business's fixed assets brought forward to the year of assessment 2016/17: 20% 30% $328,000 $75,000 2. A batch of second-hand office furniture was acquired for $9,000 on 15 September 2015. 3. On 1 December 2015, a motor van was purchased on the following hire-purchase terms: Cash price $180,000 Down payment Balance Interest 20% By 12 equal month instalments of $13,500 each commencing in January 2016 At a flat rate on the initial balance of cash price 4. The company acquired a bar coding machine (30%) for a cost of $48,000 on 20 August 2016. The company paid a deposit of $10,000 on 20 August 2016 and the remaining balance of $38,000 would not be payable until the machine was delivered and properly installed by the vendor on 8 September 2016. 5. The 30% pool includes a motor car which has occasionally been used by Thomas's wife for private purposes since 1 January 2017. The portion of private use for the whole year has been agreed with the Inland Revenue to be 30% (also 30% for the next year). The cost of the car was $156,000 in May 2014. The estimated market value of the car was $79,000 on 1 January 2017. 6. An air-conditioner (20%) was acquired for $11,000 on 31 March 2017. 7. An old packaging machine (20%) was scrapped for $12,000 on 9 June 2017. The packaging machine was purchased in February 2012 at a cost of $70,000. 8. Old curtains and carpets were replaced for $21,000 in July 2017 9. On 1 February 2018, a packaging machine (20%) was purchased on hire-purchase terms as follows: Cash price $74,000 Down payment $10,000 16 equal monthly instalments of $4,500 per month with payment due on 15th of each month commencing in March 2018. Interests are fixed for each instalment. 10. On 1 March 2018, Thomas transferred his old private car (not previously used for business) to his business for use in the business. His car was purchased on 1 November 2014 for $150,000. Its second-hand value on 1 March 2018 was $42,000. 11. An antique clock (20%) used in the office was sold for $21,000 on 18 May 2018. It was purchased at $16,000 in October 2010. 12. A computer software was installed at a cost of $28,000 in August 2018. Construction of a new workshop The company constructed a workshop in its leased factory in March 2017 at a cost of $1,280,000. The construction was completed in April 2017 and the company was able to use the workshop for its business from May 2017. In November 2017, capital expenditure of $260,000 was incurred on further improvements of the workshop. Required: Compute the depreciation allowances for Thomas's business for the year of assessment 2016/17, 2017/18 and 2018/19. Notes on specific items are not required. Hint: The basis period of the business is different from the year of assessment. You should allocate the transactions to the different years of assessment based on the basis period, not based on March 31.
Expert Answer:
Answer rating: 100% (QA)
Here are the steps to calculate the depreciation allowances for Thomass business for the years ... View the full answer
Related Book For
Posted Date:
Students also viewed these law questions
-
Section 1 Personal Information (1) Tim Choi, HKID D987654(3); Grace Lam: HKID D123456(7). Both are HKPR. (2) Tim and Grace are married with three children, Daniel and Maria, their biological...
-
The Regal Cycle Company manufactures three types of bicycles a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes...
-
What are the income-distribution consequences of fashion? Can the need to be seen driving a new car by the rich be a boon to those with lower incomes who will ultimately purchase a better,...
-
How might a public sector union use multilateral bargaining to its advantage?
-
Explain the value of using one-time passwords.
-
This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began. The components of the Burburr serial case can be completed in any order. Burburr has several properties...
-
Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 10,000 to...
-
"Managing Away Bad Habits Team Assignment Organizational Behavior IILeadership Assigned is ashort case from the exercise Managing Away Bad Habits. The task is to develop a turnaround strategy for...
-
Morton Corporation has the following full unit costs at a volume of 2,000 units: Direct materials $100.00 Direct labor 40.00 Variable manufacturing overhead 22.50 Variable selling expenses 12.50...
-
dx V-In(x) Evaluate
-
Indicate true or false for the following statements. If false, specify what change will make the statement true. _______________________ The F distribution is symmetric and has a mean of 0.
-
The range and standard deviation use different approaches to measure variation in a data set. Construct two different data sets configured so that the range of the first set is greater than the range...
-
N = 230, n = 15, k = 200 Compute the mean and standard deviation of the hypergeometric random variable X.
-
Which of the following is not one of the five major classifications of financial statement fraud? 1. Fictitious revenues 2. Improper disclosures 3. Concealed liabilities 4. Channel stuffing
-
What is a multiple bar graph, and how is it helpful?
-
Southwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit entity. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment...
-
Write each fraction as a percent. 7 50
-
An individual has capital losses brought forward from previous years amounting to 4,800. Compute the individual's taxable gains for 2017-18 if total gains and losses for the year are as follows:...
-
A company has the following results for its three most recent accounting periods: Trading profits/(losses) Chargeable gains Gift Aid donations y/e 31/5/16 59,700 8,400 1,000 eight months to 31/1/17...
-
On 19 April 2017, a c lose company (which makes up accounts to 31 March annually) lends 99,400 to Siobhan, who is a director of the company and who owns 30% of its ordinary share capital. The...
-
The three major inputs into the manufacturing process are direct materials, direct labour and factory overheads. If the costs of any of these are not controlled, they may inflate the cost of...
-
Listed below are selected financial data from the accounting records of Innovative Computers Pty Ltd for the year ended 30 June 2019. Required (a) Prepare an income statement for the year ended 30...
-
Smart Manufacturing Systems Pty Ltd provides the following information. Required (a) Calculate total manufacturing costs for the period ending 30 June 2019. (b) Calculate cost of goods manufactured...
Study smarter with the SolutionInn App