Question 1

Ace Pharmaceuticals Sdn Bhd with accounting year end 31 December, constructed a
factory costing RM 100,000 in 2015. The company sold the factory in 2018 for RM
120,000 before shifting its operation to Vietnam.
You are required to :
1. Determine the capital allowances for each relevant years for the factory
2. Compute the balancing charge or balancing allowance on the sale of factory of the
company.
3. If the company has to disposed the factory for only RM 70,000, what will be the
balancing charge or balancing allowance for the company?
ANSWER
FACTORY RM100,000
LESS:IA(10% X 100,000) 10,000
AA(3% X 100,000) 3,000
RESIDUAL EXPENDITURE RM87,000

2016
AA(3% X 100,000) 3,000
Re (87-3) 84,000

2017
AA(3% X 100,000) 3,000
Re (84 -3 ) 81,000

2018
Disposal 120,000-81000
Balancing charge 39,000
(gain from disposal)

3)Balancing allowance 11,000

(81k-11k)(loss in disposal)
Question 2

B. C Sdn BHd with accounting year end 31 December acquired the

leasehold interest of the land from B Sdn BHd for five years for a
payment of RM 50,000. It then constructed a factory building costing RM
100,000 and commenced business on 1 October 2011. The lease expired
in December 2016 and was not renewed.

You are required to:

• Briefly explain the tax treatment of the IBA with regards to the above
situation (expiry of lease interest)
• Compute the IBA of the company for YA 2011 to 2016.
• Assume that the market value is RM 90,000, determine the BC/BA
involved
• On the other hand, if the market value had been RM 70,000,
determine the BA/BC.
ANSWER

RM RM
Cost Of IB 100,000
YA 2011
IA (10%) 10,000
YA2011-2015
(5X 3%X 100,000)15,000 (25000)
Residual Expenditure 2015 75,000

Residual Expenditure 2016 75,000

Sale proceed 90,000
Balancing charge 15,000
Balancing Allowance 5,000
Question 3

Jaya Kelapa Sawit Sdn Bhd has incurred the following expenditure in
the course of its business as oil palm operators for the year ending 31
Dec 2018. You are required to identify the QAE and non QAE and
indicate the rate of allowance applicable to the relevant expenditure.
 ANSWER
You are required to identify the QAE and non QAE and indicate the rate of
allowance applicable to the relevant expenditure

Nature of expenditure RM ANS

1. Cutting and felling the forest tree 300,000 QAE (50%)
2. Purchase of seedling 65,000 QAE (50%)PREPARE LAND
3. Fertilising and insecticides 145,000 QAE(50%)
4. Planting cost 100,000 QAE (50%)
5. Fencing 410,000 QAE (50%)
6. Road, bridges, drains 500,000 QAE (50%)
7. Office building 62,000 QAE
8. Cost of land 3 million NON QAE
9. Legal fees, stamp duty on land acquisition 550,000 NON QAE
10. Fruit sorting building and loading bay 100,000 QAE
11. Accommodation for plantation worker 650,000 QAE (20%)
12. Accommodation for admin staff 150,000 QAE (20%)
Question 4
Tram Sdn Bhd carries on a business extracting timber from a forest in Kedah. The accounts
are prepared to 31 December annually. The following expenditure was incurred for the year
ended 31 Dec 2014:

Construction of road RM 30,000

Construction of living accommodation RM 90,000

The company ceased the extraction of timber from the forest on 31 Oct 2016, and disposed
the forest on 15 January 2017 for RM 18,000. Election is made under para 32, schedule 3, ITA
1967.

You are required to compute the FA/ FC for the relevant YA.
ANSWER
ROADS FOREST CHARGE ACCOMONDATION FOREST CHARGE
10% 20%
QFE RM RM RM RM
2014 30,000 90,000

2014 3,000 15,000 18,000 45,000

2015 3,000 15,000 18,000 45,000
2016 RE 24,000 54,000
2016 Forest Charge 30,000 30,000 90,000 90,000