14. Donations comprise: RM 38,000 i) Cash donation to approved organisation in December 2018 ii) Donation of school computers to an orphanage (in kind) 12,000 50,000 Other information: For the Year of Assessment 2019, the company is entitled to capital allowances of RM443,000 from previous years' acquisitions. During the financial year 2019, the company also installed billboards at shopping complexes in Penang and Malacca amounting RM190,000. Required: Based on the information given, compute the chargeable income and tax payable by JBSB for the Year of Assessment 2019. Your computation should start with the profit before taxation figure. You should indicate 'Nil where no adjustments are required. You do not need to explain the adjustments that you are making. [Total: 24 marks] Question 1 Joyce Beauty Sdn Bhd (JBSB) is a Malaysian resident company. As at 1 October 2018 it had a paid up capital of RM150 million and the company closes the accounts at 30 September each year. The company is a sole distributor of ladies cosmetic products manufactured in Penang. The company is the registered owner of the brand and the quality products are exported overseas. te trading results of JBSB for the financial year ended 30 September 2019 are as follows: Note RM'000 RM'000 Sales 312,800 Less: Cost of sales 1 (136,450) Gross profit 176,350 Add: Other income 2 Dividend 42 Interest 36 Insurance recovery 180 Gain on disposal of shares 44 302 176,652 Less: Salaries and wages 3 1,345 Employees Provident Fund 4 306 Interest 5 145 Entertainment 212 Depreciation 487 Repair and maintenance 7 175 Bad debts 8 198 Motor vehicle expenses 346 Advertisement 9 226 Professional fees 10 67 Miscellaneous expenses 11 162 Insurance 12 115 Foreign exchange loss 13 24 Donation 14 50 (3,858) Net profit before taxation 172,794 8. Bad debts are as follows: 14. Donations comprise: RM RM 38,000 Notes: 1. Cost of sales In December 2018, the company's warehouse was flooded owing to heavy rain and bad drainage. Cosmetic products worth RM68,000 stored in the warehouse were destroyed which were included in the cost of sales. The products were insured, and the loss was recovered from the insurance company. [Note 2 (ii)]. 96,000 i) Bad debts written off ii) Provision for bad debts-specific iii) Provision for bad debts-general i) Cash donation to approved organisation in December 2018 ii) Donation of school computers to an orphanage (in kind) 57,000 12.000 50.000 45,000 2. 198.000 Other information: i) 9. Advertisement expenses comprise: RM Other incomes: Dividends of RM42,000 was received from an investment in a company located abroad. Interest Interest of RM36,000 was received from fixed deposits placed with a local bank. iii) Insurance recovery a) Insurance claim received in respect of the goods destroyed during the flood in its warehouse (see Note 1) amounted RM68,000 in settlement. For the Year of Assessment 2019, the company is entitled to capital allowances of RM443,000 from previous years' acquisitions. During the financial year 2019, the company also installed billboards at shopping complexes in Penang and Malacca amounting RM190,000. 203,000 i) Advertising the company's products on television ii) Cost of product samples given to visitors at the trade fair in Singapore (approved) 23,000 Required: Based on the information given, compute the chargeable income and tax payable by JBSB for the Year of Assessment 2019, 226,000 b) During the year, one of the directors for whom a key-man term life policy was taken several years ago, died in a motor accident while on a business trip. The company recovered a sum of RM112,000 from the insurance company 10. Professional fees comprise: Your computation should start with the profit before taxation figure. You should indicate 'Nil" where no adjustments are required. You do not need to explain the adjustments that you are making [Total: 24 marks] 3. Salaries and wages: Salaries and wages include an amount of RM66,000 paid to two employees who are certified by the appropriate authorities as senior citizens (above 60 years old) and they are paid less than RM3,000 per month each. i) Legal fees for renewal of trade contracts ii) Cost of legal action taken to recover debts on trading account iii) Audit fees iv) Secretarial fees RM 4,000 12,000 34,000 17.000 67,000 4. Employees Provident Fund. EPF was paid at 25% for three executive staff on their total salaries RM850,000. 11. 5. Interest Interest of RM15,000 was incurred on an overdraft for the purchase of shares. The balance interest was with regard to the bank loan made for the purchase of cosmetic products from Taiwan Miscellaneous expenses include: () Internship expenses amounting RM24,000 under the Industry Forward (4WRD) Scheme Programme for five (5) undergraduate students which was approved in June 2019. RM38,000 was paid as fines and compounds for traffic offences. The company treats these costs as incidental to the activity of transporting goods by road. 12. 6. Insurance includes: i) During the year, the company purchased a key-man endowment policy on the life of the marketing director and paid a premium of RM12,000 for the first year. ii) Insurance was paid to an insurance company incorporated in Malaysia amounting RM69,000 on materials imported from Thailand. i) 13. Entertainment The entertainment expenditure wholly relates to sales arising from the business, and includes the following related expenditure: RM36,000 on the company's annual dinner for staff; ii) RM92,000 for the disbursement of the promotion team's entertainment expenses; and RM44,000 on the company's family day on 3 December 2018 on fares (RM8,000), food, drinks and accommodation (RM36,000) for the staff and their immediate family members in Langkawi island. Repair and maintenance Repair and maintenance include a sum of RM26,000 spent on renovating the company's office so as to provide better facilities for two disabled employees to work in comfort. The other expenses relate to maintenance of the building and cooling facilities. Foreign exchange loss Foreign exchange loss comprises of the following: 7. Unrealized loss - import of stocks from Thailand Realized loss-export of stocks to Indonesia RM 15,000 9,000 24,000 14. Donations comprise: RM 38,000 i) Cash donation to approved organisation in December 2018 ii) Donation of school computers to an orphanage (in kind) 12,000 50,000 Other information: For the Year of Assessment 2019, the company is entitled to capital allowances of RM443,000 from previous years' acquisitions. During the financial year 2019, the company also installed billboards at shopping complexes in Penang and Malacca amounting RM190,000. Required: Based on the information given, compute the chargeable income and tax payable by JBSB for the Year of Assessment 2019. Your computation should start with the profit before taxation figure. You should indicate 'Nil where no adjustments are required. You do not need to explain the adjustments that you are making. [Total: 24 marks] Question 1 Joyce Beauty Sdn Bhd (JBSB) is a Malaysian resident company. As at 1 October 2018 it had a paid up capital of RM150 million and the company closes the accounts at 30 September each year. The company is a sole distributor of ladies cosmetic products manufactured in Penang. The company is the registered owner of the brand and the quality products are exported overseas. te trading results of JBSB for the financial year ended 30 September 2019 are as follows: Note RM'000 RM'000 Sales 312,800 Less: Cost of sales 1 (136,450) Gross profit 176,350 Add: Other income 2 Dividend 42 Interest 36 Insurance recovery 180 Gain on disposal of shares 44 302 176,652 Less: Salaries and wages 3 1,345 Employees Provident Fund 4 306 Interest 5 145 Entertainment 212 Depreciation 487 Repair and maintenance 7 175 Bad debts 8 198 Motor vehicle expenses 346 Advertisement 9 226 Professional fees 10 67 Miscellaneous expenses 11 162 Insurance 12 115 Foreign exchange loss 13 24 Donation 14 50 (3,858) Net profit before taxation 172,794 8. Bad debts are as follows: 14. Donations comprise: RM RM 38,000 Notes: 1. Cost of sales In December 2018, the company's warehouse was flooded owing to heavy rain and bad drainage. Cosmetic products worth RM68,000 stored in the warehouse were destroyed which were included in the cost of sales. The products were insured, and the loss was recovered from the insurance company. [Note 2 (ii)]. 96,000 i) Bad debts written off ii) Provision for bad debts-specific iii) Provision for bad debts-general i) Cash donation to approved organisation in December 2018 ii) Donation of school computers to an orphanage (in kind) 57,000 12.000 50.000 45,000 2. 198.000 Other information: i) 9. Advertisement expenses comprise: RM Other incomes: Dividends of RM42,000 was received from an investment in a company located abroad. Interest Interest of RM36,000 was received from fixed deposits placed with a local bank. iii) Insurance recovery a) Insurance claim received in respect of the goods destroyed during the flood in its warehouse (see Note 1) amounted RM68,000 in settlement. For the Year of Assessment 2019, the company is entitled to capital allowances of RM443,000 from previous years' acquisitions. During the financial year 2019, the company also installed billboards at shopping complexes in Penang and Malacca amounting RM190,000. 203,000 i) Advertising the company's products on television ii) Cost of product samples given to visitors at the trade fair in Singapore (approved) 23,000 Required: Based on the information given, compute the chargeable income and tax payable by JBSB for the Year of Assessment 2019, 226,000 b) During the year, one of the directors for whom a key-man term life policy was taken several years ago, died in a motor accident while on a business trip. The company recovered a sum of RM112,000 from the insurance company 10. Professional fees comprise: Your computation should start with the profit before taxation figure. You should indicate 'Nil" where no adjustments are required. You do not need to explain the adjustments that you are making [Total: 24 marks] 3. Salaries and wages: Salaries and wages include an amount of RM66,000 paid to two employees who are certified by the appropriate authorities as senior citizens (above 60 years old) and they are paid less than RM3,000 per month each. i) Legal fees for renewal of trade contracts ii) Cost of legal action taken to recover debts on trading account iii) Audit fees iv) Secretarial fees RM 4,000 12,000 34,000 17.000 67,000 4. Employees Provident Fund. EPF was paid at 25% for three executive staff on their total salaries RM850,000. 11. 5. Interest Interest of RM15,000 was incurred on an overdraft for the purchase of shares. The balance interest was with regard to the bank loan made for the purchase of cosmetic products from Taiwan Miscellaneous expenses include: () Internship expenses amounting RM24,000 under the Industry Forward (4WRD) Scheme Programme for five (5) undergraduate students which was approved in June 2019. RM38,000 was paid as fines and compounds for traffic offences. The company treats these costs as incidental to the activity of transporting goods by road. 12. 6. Insurance includes: i) During the year, the company purchased a key-man endowment policy on the life of the marketing director and paid a premium of RM12,000 for the first year. ii) Insurance was paid to an insurance company incorporated in Malaysia amounting RM69,000 on materials imported from Thailand. i) 13. Entertainment The entertainment expenditure wholly relates to sales arising from the business, and includes the following related expenditure: RM36,000 on the company's annual dinner for staff; ii) RM92,000 for the disbursement of the promotion team's entertainment expenses; and RM44,000 on the company's family day on 3 December 2018 on fares (RM8,000), food, drinks and accommodation (RM36,000) for the staff and their immediate family members in Langkawi island. Repair and maintenance Repair and maintenance include a sum of RM26,000 spent on renovating the company's office so as to provide better facilities for two disabled employees to work in comfort. The other expenses relate to maintenance of the building and cooling facilities. Foreign exchange loss Foreign exchange loss comprises of the following: 7. Unrealized loss - import of stocks from Thailand Realized loss-export of stocks to Indonesia RM 15,000 9,000 24,000