Question
Answer all the questions below. The published accounts of a United Kingdom manufacturing company for a particular year showed the following: (a) operating profit of
Answer all the questions below.
The published accounts of a United Kingdom manufacturing company for a particular
year showed the following:
(a) operating profit of 5,000,000
(b) 10% depreciation on assets valued at 1.5 million
(c) interest of 5% on a loan stock with a nominal value of 2 million
(d) entertainment expenses of 300,000
(d) net investment income of 180,000 from dividends on ordinary shares of other
United Kingdom companies.
Assuming that:
1. the tax authority calculated that the capital allowances for the year came to
400,000
2. the tax authority judged that only half of the company's entertainment expenses
were "allowable"
3. the first of the accounting year fell into a financial year in which corporation tax
was 31%, and the remainder into a financial year in which corporation tax was
30%,
calculate the company's total corporation tax bill for that accounting year.
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