1. Janken Sdn Bhd (JANKEN) is a Malaysia resident company with a paid-up share capital of RM3.5 million and closes its accounts annually on 31 December. JANKEN's income statement for its financial year ended 31 December 2020 is as follows: Notes: Revenue Note RM'000 RM'000 922,000 (808,000) Less: Cost of sales 1 Gross profit Add: Other income 2 114,000 500 114,500 Less: Expenses Administration expenses 3 109,243 Selling and distribution expenses 4 386 (109,629) Profit before tax 4,871 1) Cost of sales includes the following: RM'000 Freight charges paid to Malaysian companies 201 Staff Continuous Development programme expenses Note(2)(ii) 90 Depreciation 2,200 Allowance for inventory obsolescence 900 The allowance for inventory obsolesce is calculated as follows: Opening balance Add: Current year allowance Less: Inventory write off Closing balance 2) Details on Other income: Rental income (note(i)) Interest income Grant received from Government RM'000 30 900 (470) 460 RM'000 420 35 45 500 Note (i): JANKEN incur rental income from factory in Malaysia and JANKEN provides a comprehensive and active maintenance and support services. Note (ii): JANKEN received a government grant for participating in Continuous Development Programme for its staff. 3) Administration expenses include: RM'000 Key-man insurance (JANKEN is the beneficiary) 21 Statutory audit fees (fees were outstanding at 31 December 2020) 59 Consultation fees - Tax audit 30 Vendor development programme - (approved by relevant authority) 422 Donation in kind to approved institution 450 Quit rent and assessment relating factory rented by JANKEN 29 4) Selling and distribution fees include RM212,000 for gifts to customers at the annual customer dinner. Each gift exceeded the value of RM500 and did not include JANKEN's business logo. 5) Capital allowances for the year of assessment 2020 have been calculated as follows: Manufacturing business Factory building which was rented (note (i) below) RM'000 11,698 385 Note (i): The factory was constructed during the basis period for the year of assessment 2016 and has been used in the business ever since. Required: i. Commencing with the profit before tax, compute the chargeable income and income tax payable of Janken Sdn Bhd for the year of assessment 2020. Note: You should indicate by the use of the word 'nil' any item referred to in the question for which no adjusting entry needs to be made in the tax computation. ii. Explain the tax treatment of qualifying capital expenditure and deductible revenue expenses under the ITA 1967