PAT3033 TAXATION

A222-CAPITAL ALLOWANCES

WEEK 10-11

Q1- TSB is a Malaysian resident trading company, prepares its accounts to 31 December every
year. On 3 July 2020, TSB disposed of a passenger motor car for RM45,000. The car was
purchased second hand from a car dealer on 14 April 2018 for RM120,000. What is the
amount of balancing adjustment arising on the disposal of the passenger motor car by
TSd?

Q2- Azim Sdn Bhd (ASB), a Malaysian resident manufacturing company, prepares its accounts
to 31 December every year. On 4 December 2020, ASB purchased a sorting machine and
incurred the following expenditure:

1. cost of machine of RM50,000;

2. freight cost of RM5,000 to bring the machine from Japan to the factory in Malaysia;
and

3. installation cost of RM20,000.

What is the amount of qualifying capital expenditure which can be claimed by

Azim Sdn Bhd in respect of the sorting machine?
Q3- Cherry Blossom Sdn Bhd, a Malaysian resident company, is in the business of
manufacturing artificial flowers. For the financial year ended 30 June 2020, the company moved
into a rented factory premises with the front part of the ground floor used as an administrative
office. It incurred the following expenses to renovate the premises:

RM

Replacement of damaged tiles in the office area 39,000

Legal fee and stamp duty on the tenancy agreement 5,000

Partitioning the factory floor space for use as a production and 80,000
warehouse area

Machines for production lines on hire purchase (Note 1) 140,000

Foreign exchange loss from purchase of machine (realised) 1,000

Forklift truck 80,000

Ten packaging sealers (RM1,500 each) 15,000

360,000

Note 1: The machines were purchased on a five-year hire purchase arrangement on 1

January 2020. The company made a down payment of RM20,000 and the monthly
instalment is due on the 15th of every month.

(a) Identify the qualifying expenditure and compute the capital allowances claimable for
the year of assessment 2020.

Q4-Nila Sdn Bhd (NSB) is in the business of manufacturing electronic accessories and prepares
its accounts to 31 December every year. In 2019, the company won a contract to manufacture
earphones. As the existing factory is already operating at full capacity, NSB rented an adjacent
building and incurred renovation expenses of RM300,000 to convert the building into a factory. It
also purchased a new production line for RM200,000.However, in June 2020, the customer
went bankrupt and the sale of the earphones was abruptly stopped. NSB immediately sold the
production line for RM180,000 in July 2020 and the factory area was converted into a
warehouse to store finished goods from its existing operations.On 1 July 2019, the company
purchased a passenger motor car for its managing director worth RM180,000 on a five-year hire
purchase arrangement. The deposit for the car was RM30,000 and the monthly hire purchase
instalment is RM2,750.
Determine the qualifying expenditure and compute the capital allowances and industrial
building allowances (including any balancing adjustments) available to Nila Sdn Bhd for
the years of assessment 2019 and 2020.