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Answer ALL questions. Toys Galore Ltd are a UK registered company who design and make toys for children of various ages. Their toys sell both

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Answer ALL questions. Toys Galore Ltd are a UK registered company who design and make toys for children of various ages. Their toys sell both online and in high-street retail outlets. The following information is available regarding the year ended 31 March 2020. Shares and securities transactions During the year Toys Galore Ltd had the following acquisitions and disposals of shares: 31 July 2019 Acquired 4,000 shares at a cost of 8.25 each 6 August 2019 Acquired 6,000 shares at a cost of 7.50 each 6 August 2019 Disposed 15,000 shares for 240,000 (16 each) The following prior transactions are relevant: As at 1 April 1985 - No. of shares 6,500; cost 8,500; indexed cost 10,500 10 December 1985 Acquired 2,000 shares at a cost of 4,500 30 August 1992 Acquired 5,000 shares at a cost of 12,000 1 May 2000 Acquired 500 shares at a cost of 1,500 The relevant retail prices index (RPIs) for the share holdings are: April 1985 94.78 December 1985 96.05 August 1992 138.9 May 2000 170.7 December 2017 278.1 Continued on next page L.. W C Trading profits Information The accounting profits for the year ended 31 March 2020 are 2,250,000. The accounts include the following income and expenses E Interest received 35,000 Dividends received 55.000 Interest paid on an overdraft on a business current account 6,000 Depreciation 25,000 Speeding fine 1,500 Parking ticket 450 Charitable donation 12,000 Entertainment 10.000 Toys Galore Ltd has trading losses brought forward from earlier years of 30,000. Capital Allowances Information During the year Toys Galore Ltd acquired and disposed of the following items: 01/06/2019 Equipment addition 350,000 10/06/2019 Equipment disposal 80,000, originally cost 70,000 20/06/2019 Equipment addition 120,000 30/08/2019 Equipment disposal 30,000, originally cost 40,000 20/10/2019 Plant & Machinery addition 30,000 30/11/2019 Plant & Machinery addition 280,000 31/12/2019 Equipment addition 20,000 31/01/2020 Equipment disposal 20,000, originally cost 90,000 02/02/2020 Plant & Machinery addition 320,000 20/03/2020 Plant & Machinery disposal 50,000, originally cost 35,000 Income from property information Toys Galore Ltd lets out two warehouses that are surplus to requirements. The first warehouse was let from 1 April 2019 until 28 February 2020 at a monthly rent of 5,500. On that date the tenant left, owing 2 months' rent which Toys Galore Ltd were not able to recover. Another tenant was not found until September 2020. The second warehouse was let for the whole year at a rent of 3,500 per month. Insurance costs for the warehouses totalled 8,500. Interest paid on loans secured on the warehouses totalled 6,500. During the year a surplus property was disposed of for 350,000. The incidental costs of disposal were 2,500, the original unindexed cost was 90,000, and the indexed cost was 160,000 Semester 3-2020/21 Page 13 of 14 C39TA Required: (a) Calculate Toys Galore Ltd's net chargeable gains for the year. (12 marks) (b) Calculate Toys Galore Ltd's Corporation Tax liability for the year. (15 marks) (c) When is Toys Galore Ltd required to pay its Corporation Tax liability and submit its Corporation Tax return for this accounting period? (1 mark) (d) Explain the principle behind the way trading profits are calculated for a limited company (2 marks) Answer ALL questions. Toys Galore Ltd are a UK registered company who design and make toys for children of various ages. Their toys sell both online and in high-street retail outlets. The following information is available regarding the year ended 31 March 2020. Shares and securities transactions During the year Toys Galore Ltd had the following acquisitions and disposals of shares: 31 July 2019 Acquired 4,000 shares at a cost of 8.25 each 6 August 2019 Acquired 6,000 shares at a cost of 7.50 each 6 August 2019 Disposed 15,000 shares for 240,000 (16 each) The following prior transactions are relevant: As at 1 April 1985 - No. of shares 6,500; cost 8,500; indexed cost 10,500 10 December 1985 Acquired 2,000 shares at a cost of 4,500 30 August 1992 Acquired 5,000 shares at a cost of 12,000 1 May 2000 Acquired 500 shares at a cost of 1,500 The relevant retail prices index (RPIs) for the share holdings are: April 1985 94.78 December 1985 96.05 August 1992 138.9 May 2000 170.7 December 2017 278.1 Continued on next page L.. W C Trading profits Information The accounting profits for the year ended 31 March 2020 are 2,250,000. The accounts include the following income and expenses E Interest received 35,000 Dividends received 55.000 Interest paid on an overdraft on a business current account 6,000 Depreciation 25,000 Speeding fine 1,500 Parking ticket 450 Charitable donation 12,000 Entertainment 10.000 Toys Galore Ltd has trading losses brought forward from earlier years of 30,000. Capital Allowances Information During the year Toys Galore Ltd acquired and disposed of the following items: 01/06/2019 Equipment addition 350,000 10/06/2019 Equipment disposal 80,000, originally cost 70,000 20/06/2019 Equipment addition 120,000 30/08/2019 Equipment disposal 30,000, originally cost 40,000 20/10/2019 Plant & Machinery addition 30,000 30/11/2019 Plant & Machinery addition 280,000 31/12/2019 Equipment addition 20,000 31/01/2020 Equipment disposal 20,000, originally cost 90,000 02/02/2020 Plant & Machinery addition 320,000 20/03/2020 Plant & Machinery disposal 50,000, originally cost 35,000 Income from property information Toys Galore Ltd lets out two warehouses that are surplus to requirements. The first warehouse was let from 1 April 2019 until 28 February 2020 at a monthly rent of 5,500. On that date the tenant left, owing 2 months' rent which Toys Galore Ltd were not able to recover. Another tenant was not found until September 2020. The second warehouse was let for the whole year at a rent of 3,500 per month. Insurance costs for the warehouses totalled 8,500. Interest paid on loans secured on the warehouses totalled 6,500. During the year a surplus property was disposed of for 350,000. The incidental costs of disposal were 2,500, the original unindexed cost was 90,000, and the indexed cost was 160,000 Semester 3-2020/21 Page 13 of 14 C39TA Required: (a) Calculate Toys Galore Ltd's net chargeable gains for the year. (12 marks) (b) Calculate Toys Galore Ltd's Corporation Tax liability for the year. (15 marks) (c) When is Toys Galore Ltd required to pay its Corporation Tax liability and submit its Corporation Tax return for this accounting period? (1 mark) (d) Explain the principle behind the way trading profits are calculated for a limited company (2 marks)

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