The factory building houses administrative offices worth sh.23,040,000 and a raw materials and finished goods store...

 

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The factory building houses administrative offices worth sh.23,040,000 and a raw materials and finished goods store worth Sh.8,640,000 Membley Limited installed machinery worth sh.120,000,000 on 3 January 2001 and started manufacturing drugs for human and animal use The following assets were acquired in the course of the year in addition to those mentioned above : Date 10 January 2001 11 January 2001 11 January 2001 11 January 2001 11 January 2001 15 January 2001 17 January 2001 Asset New computers Furniture Photocopier Scanner Television set (colour) 3 saloon cars (Sh.1.2 million each ) 2 lorries (4 tonnes at Sh.2 million each) Cost Sh. 1,120,000 360,000 240,000 80,000 20,000 3,600,000 4,000,000 The following assets were disposed of during the year : Date Asset 5 February 2001 Machinery (original cost sh.960,000) 6 March 2001 7 March 2001 The balances brought forward for capital allowances purposes 2001 were as follows: Class I sh. 5,780,000 Required: (a) workings (b) The company's Saloon car (original cost Sh.920,000) Furniture (original cost Sh.820,000) Capital allowances (12 marks) Class II Sh. 1,340,000 Class III Sh. 2,650,000 Proceeds 640,000 400,000 360,000 Sh. as at 1 January Class IV Sh. 3,650,000 available to Membley Ltd. in 2001. Show all your taxable profit (or loss) and tax payable (if any) The factory building houses administrative offices worth sh.23,040,000 and a raw materials and finished goods store worth Sh.8,640,000 Membley Limited installed machinery worth sh.120,000,000 on 3 January 2001 and started manufacturing drugs for human and animal use The following assets were acquired in the course of the year in addition to those mentioned above : Date 10 January 2001 11 January 2001 11 January 2001 11 January 2001 11 January 2001 15 January 2001 17 January 2001 Asset New computers Furniture Photocopier Scanner Television set (colour) 3 saloon cars (Sh.1.2 million each ) 2 lorries (4 tonnes at Sh.2 million each) Cost Sh. 1,120,000 360,000 240,000 80,000 20,000 3,600,000 4,000,000 The following assets were disposed of during the year : Date Asset 5 February 2001 Machinery (original cost sh.960,000) 6 March 2001 7 March 2001 The balances brought forward for capital allowances purposes 2001 were as follows: Class I sh. 5,780,000 Required: (a) workings (b) The company's Saloon car (original cost Sh.920,000) Furniture (original cost Sh.820,000) Capital allowances (12 marks) Class II Sh. 1,340,000 Class III Sh. 2,650,000 Proceeds 640,000 400,000 360,000 Sh. as at 1 January Class IV Sh. 3,650,000 available to Membley Ltd. in 2001. Show all your taxable profit (or loss) and tax payable (if any)

Answer rating: 100% (QA)

a Capital Allowances Calculation First lets calculate the initial allowances for each asset class ba... View the full answer