Revision Questions PDF

ADDITIONAL MATERIALS
Company Taxation
1.
Emory Sdn Bhd (Emory) is in the business of manufacturing hardwood and has a Malaysian brand
‘Solid’ which has been duly registered with the relevant authorities. Emory’s issued share capital is
RM3,500,000 and all of its shares are owned by Malaysian residents. Emory makes up its accounts to
30 September each year and the following information relates to its year ended 30 September 2016:
RM’000 RM’000
Gross sales
Local market 19,000
Export market (Note 1) 800 19,800
Cost of sales
Depreciation 1,000
Import duties 10
Freight charges 29
Insurance premiums on exports of cargo
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er as
(paid to a locally incorporated insurance company) 2
Other deductible expenses 10,859 (11,900)
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eH w
o.
Other income rs e
Dividend income from a subsidiary in Penang, Malaysia 35
ou urc
Sale of sundry scrap inventory (stock) 1,000
Foreign exchange gains from trade receivables (unrealised) 88 1,123
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General and administration expenses

aC s
Audit fees 50
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Staff remuneration (Note 2) 2,400

Cash donations to approved institutions 103
Staff entertainment expenses 18
Leave passages 6 (2,577)
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Selling and distribution expenses

Cash contribution to sponsor a local artist’s activity
(approved by the relevant authority) 505
Irrecoverable debt written off on a car loan to an employee 39
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Advertisement and promotion expenses to promote the

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Malaysian brand ‘Solid’ in the local newspapers 9 (553)
Finance charges
Interest expenses (8)
sh
Notes:
1. The export sale was made from Emory’s factory in Shah Alam, Malaysia to a distributor in Brunei.
The distributor had not settled the amount of RM800,000 as at 30 September 2015. The total
exports for the current year are expected to be not more than 5% of total sales.
2. The staff remuneration comprises salaries of RM2,000,000 and the related employees’ provident
fund (EPF) contributions of RM400,000.
ACC2054
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3. The capital allowances claimable for the year are RM1,230,000.
4. Profit before tax during the year 30 September 2016 is RM5,885,000.
Required:
Prepare the computation of the tax payable by Emory Sdn Bhd for the year of assessment 2016.
All workings must be clearly stated.
Your computation should start with the profit before taxation figure and follow the description
used in the notes to the company’s income statement. Indicate ‘nil’ in the appropriate column
for any item that does not require adjustment in your tax computation.
2. ACCA June 2012

Dinishah Sdn Bhd manufactures glass products for both the local and export markets. The company's
income statement for the year ended 31 December 2016 is as follows:
Notes RM
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Sales revenue 1,200,000
er as
Less: Cost of sales 1 (230,000)
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Gross profit 970,000
Operating expenses 2-6 (650,000)
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Profit before tax
rs e 320,000
ou urc
Notes
1 Cost of sales includes the following: RM
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Provision for stock obsolescence 5,000

aC s
Insurance premium paid to a company incorporated in Malaysia,

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for insuring raw materials supplied from Hong Kong 6,000

11,000
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RM
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2 Staff welfare costs includes leave passage for a director. 15,000
3 The company incurred the following charges: RM

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Interest on overdue trade account payables 5,000

Interest on overdue corporate credit card account 2,500
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Legal fees on securing a new term loan 12,000

19,500
sh
4 Bad and doubtful debts (all trade in nature) are as follows: RM

Bad debts written off during the year 10,000
General provision at year end 31 December 2016 15,000
Specific provision at year end 31 December 2016 12,000
Bad debts recovered during the year (9,000)
General provision at 31 December 2015 (12,000)
Specific provision at 31 December 2015 (7,500)
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Charged to income statement 8,500
5 Donations and social contributions RM

(i) Donations:
In cash to:
- a womens' cancer centre (this is an approved community project) 15,000
- a project of national interest (approved by the minister) 6,500
- State Government 104,000
125,500
(ii) As the company's shareholders are Muslim, the company contribute zakat perniagaan of
RM210,000 during the year.
(iii) The company's office building was renovated at a cost of RM20,000 for the
installation of safety features to create a safe environment for disabled workers.
(iv) The company contributed towards the acquisition and training of guide dogs
for blind employees of a shopping complex dedicated to the employment of
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the blind. The contribution was valued by the city council at RM20,000
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6 The company paid the following subscriptions: RM
o.
Corporate membership subscription to a recreation club
rs e 2,000
Advertising fee on a new billboard 1,200
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Renewal of trade licence fee 2,000
5,200
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7.(i) The unabsorbed capital allowance brought forward from the year of assessment 2010 is
aC s
RM11,000.
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(ii) The current year capital allowance is RM18,000.

(iii) The unabsorbed loss brought forward from the year of assessment 2015 is RM10,000.
(iv) The company has a balancing allowance of RM7,000 in respect of the disposal of a motor
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vehicle
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Required:
Compute Dinishah Sdn Bhd's chargeable income for the year of assessment 20165.
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Note: Your computation should start with the 'Profit before tax' figure and should include all of the
items referred to in notes 1 to 7, indicating by the use of the word 'NIL' where no adjustment or
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inclusion is needed. Marks will be awarded for the use of accurate technical terms to describe the
figures comprising the stages in the computation of chargeable income.
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3.
Boo Sdn Bhd, a resident company engaged in furniture-making, submits its profit and loss account for
the year 31 July 2016 as follows:
Note RM'000 RM'000

77,350
Cost of sales 1 (56,440)
20,910
Other income 2 185
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21,095
Less: Expenses
Remuneration 3 3,972
Repairs and maintenance 4 308
Marketing 5 1,482
Freight charges 6 152
Financial charges 7 820
Entertainment 8 468
Motor vehicles expenses 9 770
Provision for bad debts 644 (8,616)
Profit before tax 12,479
Notes:
1. Cost of sales includes:
a. Furniture costing RM24,700 donated to an approved old folks home. The selling price was
RM26,000
b. A set of bedroom furniture costing RM6,400 sold to a member of staff at 5% discount.
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The selling price was RM7,000
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2. Other income is in respect of the gross rents derived from a property in Indonesia and received in
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Malaysia
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3. Remuneration includes:
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a. Entertainment allowance of RM500,000 paid to the managing director and the marketing
rs e
executives
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b. Employees Provident Fund contributions of RM60,000 made by the company in respect
of the abovementioned entertainment allowance.
4. Repairs and maintenance include:
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a. Cost of maintaining a holiday bungalow in Penang used in by the senior executives of the
company, RM30,000
aC s
b. Cost of maintaining a holiday bungalow in Cameron Highland used exclusively by the

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company’s clients of RM42,000

5. Marketing includes the expenditure of RM329,000 on participation in an international trade fair
held in Kuala Lumpur. The Minister of International Trade and Industry approved both the trade
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fair and the company’s participation. The aim of the trade fair is to promote exports. Included in
the expenditure is the cost of exhibits of RM8,000.
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6. Freight charges comprise of shipping the furniture manufactured by the company from Sarawak
to Port Klang.
7. Financial charges include a sum of RM38,000 being the mortgage loan interest incurred on the
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property in Indonesia and a loss of RM14,000 on foreign exchange on the mortgage loan interest.
8. Entertainment comprises of:
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a. Overseas leave passages for the managing director and two other senior executives
amounting to RM63,000
b. Corporate memberships to golf clubs made up of entrance fees of RM270,000 and
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monthly subscriptions of RM135,000. The purpose of the corporate membership is to

promote the business of the company.
9. Motor vehicles expenses include:
a. Depreciation of RM175,000
b. Gain on sale of a lorry RM3,000
c. Fine of RM5,000 for traffic offences committed by the lorry driver
10. Provision for bad debts comprises:
a. Bad debt written off of RM83,000 including a sum of RM10,000 which is in respect of a
car loan to an ex-employee
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b. Net increase in specific provision of RM271,000 including RM33,000 which relates to non-
trade debts
c. Bad debts recovered of RM60,000 for which RM20,000 received from non-trade debtors.
d. Net increase in general provision of RM350,000.
11. On April 2016, the company purchased new equipment machinery for RM70,000.
12. The residual expenditure as at 31 July 2015 in respect of lorry was RM49,000. The lorry was sold
for RM51,000 on 11 November 2015.
13. Brought forward capital allowances are RM180,000. The capital allowances for the year of
assessment 2016 amount to RM166,000, excluding the assets sold and acquired during the
financial year.
14. An adjusted loss of RM99,000 is brought forward from the YA2015.
Required:
1. Compute the tax payable of Boo Sdn Bhd for the year of assessment 2016.
Your computation should start with the net profit before taxation figure and follow the
descriptions used in the notes to the profit and loss account indicating ‘nil’ in the appropriate
column for every item that does not require any adjustment.
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2. Explain your treatment of the items mentioned in notes 1-7 inclusive.
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CAPITAL ALLOWANCES
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1.
rs e
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Comfort Sdn Bhd, which prepares its accounts to 30 June annually, carries on a shoe manufacturing
business in a rented factory up to 31 July 2014. In April 2014, it completed the construction of its own
factory and office premises and commenced manufacturing operations in its new building on 1 August
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2014. 15% of the total floor space of the factory building was used as an office and showroom. The
aC s
details of its expenditure for the year ended 30 June 2015 are as follows:
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RM
ed d
Land 750,000
Legal fees:
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Agreement for purchase of land 10,900

Agreement with building contractor 10,000
Consultants’ fees and building plans 55,000
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Stamp duty for purchase of land 5,000

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Construction costs 900,500

Plumbing and wiring 150,000
1,881,400
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The company also owns the following assets as at 30 June 2015. No new assets were acquired during
the year.
Cost
RM
Van (acquired in 2012) 130,000
Heavy machine (acquired in 2013) 250,000
Motorcar * 135,000
Furniture and fittings 25,000
(residual expenditure brought forward – RM18,500)
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* The company bought a used Mercedes Benz costing 135,000 on 15 July 2013 by hire purchase. The
company paid deposit of RM35,000 and the instalment of RM4,280 is payable in 25 months
commencing 1 August 2015.
Required
(a) Where a person has incurred qualifying plant expenditure for the purpose of a business, he is
entitled to claim an initial allowance and annual allowance. Explain the differences between
the two allowances.
(b) Prepare the computation of the industrial building allowance/ capital allowances for Comfort
Sdn Bhd for the year of assessment 2015 using all information given. Show the residual
expenditure of all assets as at the end of the basis period of the year of assessment 2015 clearly.
2.
Eleven Sdn Bhd (ESB) is in the business of manufacturing auto gates and prepares its accounts annually
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to 31 December. In 2013, the company constructed a factory building in Selangor and commenced
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using it in its business operations. ESB incurred the following expenditure on the factory in the basis
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period for the year of assessment 2013:
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RM
o.
Cost of land rs e 1,000,000
Construction cost and related expenditure for the building 4,000,000
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The total area of the factory building is 100,000 square feet, of which the total office area is 20,000
square feet. ESB intends to move its manufacturing operations to a brand new state-of-the-art
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building in Johor in the year 2015. Immediately thereafter, it plans to dispose of the Selangor factory
aC s
building.
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Details of the expected proceeds from the impending disposal of the Selangor factory are as follows:
RM
ed d
Land 2,000,000
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Factory building 6,000,000

––––––––––
Total 8,000,000
––––––––––
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Required:
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In respect of Eleven Sdn Bhd’s Selangor factory building:

1) Determine the qualifying building expenditure;
2) Compute the industrial building allowances and residual expenditure for the years of
assessment 2013 and 2014; and
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3) Compute the balancing charge or balancing allowance in respect of its disposal during the year
of assessment 2015.
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PERSONAL TAX COMPUTATION

1.
Chan Abdullah is married with three children aged 21, 18 and 14 years respectively. The eldest is
currently studying in Lancaster University for his Bachelor degree, the 18 years old son is currently
taking his A-level in Sunway College and his youngest daughter is in secondary school. Chan has a life
insurance policy taken out on which he pays premium amounting to RM1,500 per annum. During the
year, Chan paid for his father’s medical expenses of RM4,200 and made zakat contributions amounting
to RM5,250 in 2016.
Chan is a managing director of a company from which he receives a salary of RM12,000 per month. In
addition, he received director fee of RM5,000 during the year ended 31 December 2016. The benefits
provided to him include:
1. Accommodation for which the company pays monthly rental of RM3,000 (wife preferred to use
their own furnishings).
2. Medical expenses of RM5,000 for the year.
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Chan also received RM48,000 dividend from ABC Berhad (single tier) on 20 December 2016.
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Since Chan is provided with accommodation, he has decided to rent out his house in Subang Jaya.
Chan has incurred RM10,000 to renovate the kitchen of the house before rented it out on 1 March
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2016 for RM2,200 per month. He also pays mortgage interest of RM650 per month and quit rent and
assessment of RM1,350 per annum.
rs e
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Chan’s wife, Salina, runs a boutique in Bangsar. Currently, her business is not doing well. Her adjusted
loss for the year of assessment 2016 is RM8,000. In her spare time, she did some translation of literary
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work for the Minister of Education and received translation fees of RM42,000. She made a cash
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donation of RM3,000 to an approved institution on 28 July 2016.

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Required
(a) Prepare the computation of the chargeable income and the income tax payable by Chan
Abdullah and Salina for the year of assessment 2016 using the most tax efficient method of
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assessment.
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You should indicate by the use of the word ‘nil’ for any item referred to in the question for
which no adjusting entry needs to be made in the tax computation. Marks will be awarded for
a proper tax computation format presented in accordance to s.5 of Income Tax Act 1967.
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2.
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Solid Wood is a partnership operated by Zarif and Pravin. The accounting year of this partnership ends
every 31 December. The profit and loss account for the year ended 31 December 2016 shows the
following:
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Note RM'000 RM'000

Sales 1,013
Less: Cost of sales 650
Gross profit 363
Less: Expenses
Salary and EPF 1 135
Bank charges 2
Depreciation 18
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Utility expenses 23
Partners' insurance 2 16
Assessment and quit rent 3 5
Donations 4 6 (205)
Net profit 158
Notes:
1. Included in salary and EPF expenses are salaries of RM50,000 for each partner.
2. This refers to the equal premium payable on a life insurance policy to cover the lives of the
partners.
3. Assessment and quit rents for the year on partner’s house, Pravin.
4. Cash donation made to Red Crescent Society, an approved institution on 30 June 2016.
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5. The profit sharing ratio among the partners is:
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Zarif : Pravin = 3 : 2
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6. The qualifying expenditure as at the year of assessment 2016 are as follows:
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rs e RM
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Office equipment 80,000
Furniture and fittings 35,000
Computers 40,000
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All of these assets were bought in year of assessment 2015.

aC s
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Zarif
In addition, Zarif has provided you with additional information as follows:
On 1 May 2016, he lets out his apartment in Selayang which he acquired on 15 January 2016. The
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following is the income and expenditure with regard to this apartment as at 31 December 2016:
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Receipts RM
Rental income 2,000/month
Rental received in advance for January –February 2017 4,000
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Refundable deposits for utilities 1,500

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Expenditure
Assessment rates 1,500
Repairs carried out on 1 March 2016 7,000
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Interest on loan to acquire the apartment 1,600/month
He also incurred the following expenses during the year 2017:

 Medical fees on parents of RM3,700.
 Books of RM1,200 however, he is only able to provide receipts for RM870.
 Paid zakat to Lembaga Zakat Selangor (LZS) of RM8,300 (all receipts properly kept).
Required
(a) Prepare the computation of:
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(i) the provisional adjusted income/(loss) and divisible income/(loss) of the partnership; and
(ii) the statutory income of each of the two partners for the year of assessment 2015.
Show all workings clearly and use accurate technical terms to describe the figures calculated at
various stages of the computations.
(b) Prepare the computation of the chargeable income and the income tax payable by Zarif for the
year of assessment 2016.
You should indicate by the use of the word ‘nil’ for any item referred to in the question for which
no adjusting entry needs to be made in the tax computation. Marks will be awarded for a proper
tax computation format presented in accordance to s.5 of Income Tax Act 1967.
(c) Advise Zarif on the tax incentive available to him if he intends to purchase a personal computer
for his own use.
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aC s
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ADDITIONAL MATERIALS

General and administration expenses

Staff remuneration (Note 2) 2,400

Selling and distribution expenses

Advertisement and promotion expenses to promote the

Malaysian brand ‘Solid’ in the local newspapers 9 (553)

3. The capital allowances claimable for the year are RM1,230,000.

4. Profit before tax during the year 30 September 2016 is RM5,885,000.

2. ACCA June 2012

Provision for stock obsolescence 5,000

Insurance premium paid to a company incorporated in Malaysia,

for insuring raw materials supplied from Hong Kong 6,000

2 Staff welfare costs includes leave passage for a director. 15,000

3 The company incurred the following charges: RM

Interest on overdue trade account payables 5,000

Legal fees on securing a new term loan 12,000

4 Bad and doubtful debts (all trade in nature) are as follows: RM

Charged to income statement 8,500

5 Donations and social contributions RM

(ii) The current year capital allowance is RM18,000.

Note RM'000 RM'000

b. Cost of maintaining a holiday bungalow in Cameron Highland used exclusively by the

company’s clients of RM42,000

monthly subscriptions of RM135,000. The purpose of the corporate membership is to

Agreement for purchase of land 10,900

Stamp duty for purchase of land 5,000

Construction costs 900,500

Factory building 6,000,000

In respect of Eleven Sdn Bhd’s Selangor factory building:

PERSONAL TAX COMPUTATION

donation of RM3,000 to an approved institution on 28 July 2016.

Note RM'000 RM'000

All of these assets were bought in year of assessment 2015.

Refundable deposits for utilities 1,500

Interest on loan to acquire the apartment 1,600/month

He also incurred the following expenses during the year 2017:

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