Robik Ltd is a Cyprus resident manufacturing company. The companys summarised statement of profit or loss for
Question:
Robik Ltd is a Cyprus resident manufacturing company. The company’s summarised statement of profit or loss for the year ended 31 December 2015 is as follows:
Notes | € | € |
Gross profit | 560.000 | |
Less: Operating expenses | ||
Depreciation | 1 | 45,560 |
Patent royalties paid | 2 | 12,500 |
Office rent | 24,000 | |
Irrecoverable receivables (debts) | 3 | 29,000 |
Gifts and donations | 4 | 6,215 |
Professional fees | 5 | 30,950 |
(148,225) | ||
Operating profit | 411,775 | |
Less: Finance costs | 6 | (12,650) |
Profit before taxation | 399,125 |
Notes:
- Depreciation
The relevant capital allowances for tax year 2015 are €35,850.
- Patent royalties comprise:
€ | |
Accrued at 31 December 2014 | (3,600) |
Paid on 31 October 2015 | 10,500 |
Accrued at 31 December 2015 | 5,600 |
12,500 |
- Irrecoverable receivables (debts) comprise:
€ | |
Trade receivables (debts) written off | 12,500 |
Increase in the general allowance for irrecoverable debts | 16,500 |
29,000 |
- Gifts and donations comprise:
Gifts to customers (coffee cups costing €5 each and displaying the company’s name) | 5,550 |
Donation to a local football club | 65 |
Donation to an approved charity | 600 |
6.215 |
- Professional fees comprise:
Legal fees in connection with the issue of share capital | 5,550 |
Legal consultants – annual retainer fee | 10,000 |
Accountancy and audit fees | 15,400 |
30.950 |
- Finance costs
Interest in respect of a debenture loan which had been used for trading purposes of €12,650 was paid on 31 December 2015.
Required:
Calculate Robik Ltd’s taxable profit and corporation tax liability for the year 2015.
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow