Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

13 (20 marks) SPACE Limited is a Hong Kong company carrying on a trading business in Hong Kong and all its profits are derived from

13 (20 marks) SPACE Limited is a Hong Kong company carrying on a trading business in Hong Kong and all its profits are derived from Hong Kong. The income statement of the company for the year ended March 31, 2016 is as follows: $ $ Gross profit 25,000,000 Dividend received from a subsidiary in Hong Kong 404,000 25,404,000 Less: Audit fee 120,000 Bad debts (note 1) 350,000 Compensation (note 2) 140,000 Depreciation 450,000 Donation made to Community Chest 250,000 Interest (note 3) 155,000 Legal and professional fee (note 4) 70,000 Rent 2,500,000 Salaries and allowances 20,000,000 Staff welfare (note 5) 250,000 Sundries (note 6) Tax (note 7) Travelling (note 8) Net profit 190,000 360,000 350,000 25,185,000 219,000 Notes: 1 Trade debts written off. -customers whose addresses were known -customers whose identities were NOT disclosed 2 Compensation paid to landlord for early termination of lease of the old office 250,000 100,000 350,000 80,000 60,000 140,000 Penalty paid to clients for late delivery of goods 3 Interest paid to: - an individual director 35,000 -the subsidiary in Hong Kong for a loan to finance the purchase of trading stock 120,000 155,000 4 Legal fee paid for lease of new office 30,000 Professional fee paid to the tax representative for the preparation of profits tax return 40,000 70,000 5 Annual dinner Trip to Hong Kong Disneyland for staff 6 All sundry expenses were allowable. 100,000 150,000 250,000 10 7 This was the company's profits tax liability. 8 All traveling expenses were reimbursed to directors for their overseas business trips in attending conferences. 9 The assessor agreed with the company that depreciation allowances for the year of assessment 2015/16 is $1,300,000. Required: Calculate the profits tax payable, if any, by SPACE Limited for the year of assessment 2015/16. Ignore provisional profits tax and tax rebate or reduction, if anyimage text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Jan Williams, Sue Haka, Mark Bettner, Joseph Carcello

15th Edition

0077328701, 9780077328702

More Books

Students also viewed these Accounting questions

Question

Explain what a flexible manufacturing system (FMS) is.

Answered: 1 week ago

Question

To whom would I report? Would anyone report to me?

Answered: 1 week ago

Question

7. How can an interpreter influence the utterer (sender)?

Answered: 1 week ago