a.

Assess tax adusted trading profit using the information given in statement of profit or loss and notes for Fashion Line Ltd for the year ending on 31 March 2021. Start with the profit before taxation figure of 1,009,500 and list all of the items in the statement of profit and loss and in notes indicating by the use of a zero (0) any items that do not require adjustment. Assume that Fashion Line Ltd claims maximum available capital allowances. (3.5 marks)

b.

Assess taxable total profits for the period ended 31 March 31, 2021. (1 marks)

c.

Assess Fashion Line Ltds corporation tax liability for the period ended 31 March 2021.

please solve ABC at the end (task at the end) , i have added all the requirments for you to solve. i may seems alot but its not just 3 questions,

if you solved ill upvolt for you

SECTION TWO (5 marks)

Fashion Line Ltd is a UK resident company. Company prepares its accounts to 31 March each year. The statement of profit or loss prepared in accordance with the international financial reporting standards (IFRS) for the year ended 31 March 2021 is given below:

Sales 18,500,000

Cost of goods sold (14,500,000)

Gross margin 4,000,000

Operating expenses:

Impaired trade debt (Note 1) 20,500

Selling costs (Note 2)200,500

Legal, professional and trade fees (Note 3) 92,800

Repairs and renewals (Note 4) 65,300

Vehicles maintenance (Note 5)225,000

Leasing cost-motor cars (Note 6) 24,200

Depreciation 310,000

Employee costs (Note 7) 1,305,800

Rent cost (Note 8) 320,000

Other expenses (Note 9) 588,900

(3,153,000)

Operating profit 847,000

Other income:

Rental income (Note 10) 56,350

Bank interest received (Note 11) 32,000

Dividends received (Note 12) 141,650 230,000

Finance costs

Interest expenses (Note 13) (67,500)

Profit before taxation 1,009,500

Notes:

1. Impaired trade debt

On 31 December 2020, Fashion Line Ltd wrote off an impairment loss of 20,500 in respect of

an invoice.

2. Selling costs

Selling costs include:

Gifts to the customers (wall clocks bearing company name costing

65 per customer) 9,000

Advertising and promotions 60,500

Entertaining UK customers 7,500

Entertaining overseas customers 7,500

Gifts to suppliers 12,500

3. Legal, professional and trade fees

Fee paid for accounting and audit services 18,000

Annual subscription to business and trade association 2,000

Legal fee in connection with the trade financing (Note 13) 8,700

Charges paid for debt collections 15,000

Legal fee in connection with acquiring and registering new vans21,300

Legal fees in connection with a new 40-year lease 7,500

Professional fee paid to counsellor hired for terminated employees 20,300

92,800

4. Repairs and renewals:

Annual heating maintenance charges for company premises

(cover the period from 1 April 2020 to 31 March 2021) 35,000

Repainting business premises 13,500

Built new offices for the staff 16,800

65,300

5. Vehciles maintenance

Include fuel cost and the cost of maintaining companys vans and motor cars.

All motor cars are used for 30% private mileage by the employees and directors.

6. Leasing cost-motor cars

The leasing cost reported on the statement of profit or loss is in respect of the following two motor cars:

i). Motor car that has CO2 emissions of 125 grams per kilometer, leasing cost 14,200

ii). Motor car that has CO2 emissions of 80 grams per kilometer, leasing cost 10,000

7. Employee costs

Employee costs include:

Fashion Line Ltds national insurance contributions 80,500

Annual staff party (entertainment of employees)21,300

Gifts to the employees 7,000

8. Rent cost

Include rent paid for the rented business premises.

9. Other expenses

Other expenses include:

Donations to M&M Foundation (an approved charity), company received

a free advertisement in the charitys monthly magazine 11,500

Donations to approved charities (qualifying) 10,000

Political donations 8,500

Fine for health and safety breach 4,200

Penalty on late payment of taxes to HMRC 800

10. Rental income

Rental income is received in respect of an office space let out by the company to an

unconnected entity. The amount of rental income reported in the statement of profit or

loss is the amount taxable for the financial year 2020.

11. Bank interest

The bank interest was received on 31 March 2021. The bank deposits are held for non-trading purposes.

12. Dividends

Dividends reported in the statement of profit or loss were received from another UK

resident company.

13. The interest payable is in respect of the companys 3% loan stock. The loan stock was

used to finance the companys trade activities. The interest amount given in the statement

of profit or loss is the amount accrued on 31 March 2021.

14. The tax written down value of Fashion Lines main pool assets on 1 April 2020 was 1,500,000. Following assets were acquired and disposed during the year to 31 March 2021:

Acquisitions:

1 May 2020 Purchased vans 342,000

1 July 2020 Purchased new motor car CO2 emissions 45g/km 7,500

4 Sep 2020 Purchased motor car CO2 emissions 100g/km 21,800

5 Dec 2020Purchased equipment 18,400

Disposals:

10 Jan2021Sold a motor car CO2 emissions 95 g/km 4,000

5 March 2021Sold equipment 11,200

Original costs of motor car and equipment sold are 8,400 and 9,000 respectively.

Assume, Fashion Line Ltd has no special rate pool item.

Tasks:

a.

Assess tax adusted trading profit using the information given in statement of profit or loss and notes for Fashion Line Ltd for the year ending on 31 March 2021. Start with the profit before taxation figure of 1,009,500 and list all of the items in the statement of profit and loss and in notes indicating by the use of a zero (0) any items that do not require adjustment. Assume that Fashion Line Ltd claims maximum available capital allowances. (3.5 marks)

b.

Assess taxable total profits for the period ended 31 March 31, 2021. (1 marks)

c.

Assess Fashion Line Ltds corporation tax liability for the period ended 31 March 2021.