ACC2054 – Tutorial 6

Question 1
Vikram Motor Repairs Sdn Bhd operates a car repair business. The company’s
accounts close at 31 December each year.
The following expenditure was incurred in the acquisition of a private motor car
under hire purchase agreement.
Amount
RM
Honda Accord 2.0L
Cost of car– cash price 135,000
Deposit – paid on 1 January 2018 (30,000)
Hire purchase finance 105,000
HP interest 42,000
Total sum payable 147,000

The total sum is repayable in 60 equal monthly instalments with effect from 1 March
2018

Required:
Compute the capital allowances, balancing allowance/charge due to Vikram Motor
Repairs Sdn Bhd and the residual expenditure for the relevant years of assessment.

Question 2

(1) Expenditure of leasing an equipment used in factory.

Guide:
This is a trap question.

(2) Expenditure of constructing 2 buildings on a poultry farm. One of the buildings is

used as living accommodation by farm labourers, while the other is used by
management, administrative and clerical staff.
Reminder:
This is a farm.

(3) Expenditure incurred for replacing the roof of factory with a better material.
Guide:
This is actually related to Chapter 4 - repair & renewal.
Follow back the common way of discussion: part/entirety, improvement.
But the last part of the solution is related to this chapter.

(4) Expenditure of acquiring a computer printer of RM1,500. The printer has been
expensed to the income statement for the year ended 31 December 2020.
Guide:
Please pay attention to the amount.

Required:
Explain whether the above expenditure can be “qualifying expenditure” within the
meaning of Schedule 3 of the Income Tax Act 1967.
ACC2054 – Tutorial 6

Question 3

The following new motor cars were acquired by Usaha Tegas Bhd during the
financial years ended 31 December 2015 and 2016:
a. Perodua Myvi on 15 May 2015 for RM50,000
b. Peugeot 407 on 28 October 2016 for RM135,000
Calculate the capital allowances available for years of assessment 2015 and 2016.

Additional Question 3
Refer question 3, assume that in December 2018 Usaha Tegas sold the Perodua
Myvi for RM8,000 and the Peugeot 407 for RM44,550.

Question 4

Tasha’s Herbal Remedies Sdn Bhd is a Malaysian incorporated company operating

in Johor Baru. It closes its accounts annually to 31 December each year. The
company constructed its own factory for the production of its medical products in
the year 2018. The expenditure incurred in the construction of the factory is as
follows:

Expenditure RM
Cost of land 2,000,000
Legal fee for transfer of land 15,000
Architect’s fee 48,000
Preparation of site 180,000
Piling and foundation works for building 300,000
Construction of building 1,150,000
Construction of surrounding wall 220,000
Legal fees for building approval 70,000
Charges for wiring and plumbing works 214,000
Total qualifying building expenditure 4,197,000

Required:
Determine the qualifying industrial building expenditure and compute the industrial
building allowances for the year of assessment 2018.

Guide:
Refer to the list of qualifying expenditure in lecture.