(a) Brian owns a small manufacturing business of coffee shop. During the financial year ended 31 July 2020, the following assets appeared in Leong’s business accounts:

Two coffee machines

An Audi (a passenger car) acquired on hire purchase

A cash register machine

Furniture and fittings

The assests were acquired between one to five years ago. Brian is considering to dispose a few of the above assets and replace them with new ones. He is also considering to form a partnership to expand his business. 

 

Required

Evaluate Brians’s business eligibility in claiming capital allowances by discussing TWO (2) conditions that to be fulfilled in order to claim the capital allowance.    

marks)                   

Provide Biran an advice with regards to his plans to dispose his assets. Your advice should include the discussion on any allowances and allowances that may arise from the disposal.                                         

marks)

Advise Brian on the implications of capital allowance eligibility if he forms a partnership.

marks)

 

(b) Dr Cardeen Bhd, a company manufacturing t-shirts, acquired the following assets during its fiscal year ended 30 June 2020.

 

Printing machine:

Cost of the machine, RM280,000

Cost of alteration to the existing building for the installation of the machine, RM33,600 and incidental costs of installation, RM2,400.

 

Motor vehicle - Car:

new car purchased for the Head of Department of Finance at cost of RM120,000

 

Motor Vehicle - Lorry:

new lorry purchased at cost of RM220,000

 

All three assets were in use for the purposes of the business at the end of the financial year ended 30 June 2020.

 

Required

(i) Determine the qualifying expenditure in respect of the printing machine and motor vehicle (car and lorry) for YA 2020.                                  (6 marks)

 (ii) Solve the capital allowance for a printing machine and motor vehicle (car and lorry) for YA 2020.                                                                        (4 marks)