Question 2 (15 Marks)

A. Libra Sdn Bhd is a resident company located in Kajang, Selangor. In line with its business

expansion program, company has purchased a land costing RM2 million on 1 April 2015 to

construct a new factory. For the financial year ended 30 June 2017, the following expenditures

were incurred:

RM

Legal fee for land acquisition

90,000

Architects fee

150,000

Electrical wiring & fittings

80,000

Draining system

15,000

Demolition of illegal squatter houses

20,000

Construction costs

2,200,000

2,555,000

The construction of the factory was completed on 1 March 2017 and immediately used as a

factory. Total built-up of the factory was 40,000 sq.ft which 2,000 sq.ft. was used as an office.

The company also incurred the following expenditures during year 2018;

i.

Construction of living accommodation for factory workers at a cost of RM320,000.

ii.

A staff recreation building for RM80,000.

Required:

Calculate the industrial building allowances for all relevant till year of assessment 2020 for all

buildings.

(10 marks)

(CLO1:PLO1:C4)

B.

Explain in details on the concept of relevant interest.

(5 marks)

(CLO1:PLO1:C4)