Bookcentre Ltd (the company) is a printer and publisher of books carrying on business in Hong Kong. The company also holds Hong Kong residential flats both for resale and long- term investment. The Commissioner of Inland Revenue accepts that for profits tax purposes the company's property dealing and investment activities can be separated on the basis of the classification adopted in its accounts. For the year ended 31 March 2020, the company's profit and loss account shows: HKS HKS Profit from publishing 1,300,000 Profit from property trading 200,000 Rental income (net of expenses) 400,000 Compensation payment for loss of contract (1) 380,000 Royality income (2) 200,000 Interest income (3) 120,000 2,600,000 Less: Interest (4) 280,000 Rent and rates 300,000 Legal fees (5) 54,000 Staff salaries (6) 980,000 Taxes (7) 63,000 Depreciation 85,400 Compensation for cancellation of contract (8) 10,000 Retirement fund (9) 89,000 Miscellaneous (all allowable) 53,000 Carpet (10) 60,000 Reseach (11) 170,000 2,144,400 Net profit 455,600 Notes: {1) {2) {3) {4) {6) {7) {8) Compensation was received from a Singapore customer who terminated a printing contract signed in an ea r1ier year. The company purchased a proprietary right of a foreign language book written in country A. The related purchase contract was effected in country A. The company was able to provide full documentary evidence to demonstrate the locality of where the purchase contract was effected. The royalty income was earned from an unrelated business in Hong Kong by allowing it to print the book in Hong Kong. Details ofinterest income received are: Interest on HKS fixed deposit placed with Citibank, Hong Kong branch $45,000 Interest on USS xed deposit placed with Bank of America, New York S 65,000 branch Interest from a trade customer in Singapore due to overdue accounts 5 10,000 S 120,000 To nance the purchase of two residential ats, the company borrowed money from an unrelated company carrying on manufacturing business in Mainland China. Details of the interest paid on the loan is as follows: Interest paid for the at in North Point S 100,000 Interest paid for the at in Shatin S 130,000 5 280,000 The flat in North Point is now leased for rental income and is held as a long-term investment. The flat in Shatin was sold three months after acquisition. The legal fees were incurred to defend the prosecution of a company director for an offence under the Prevention of Bribery Ordinance. The director was convicted and is now in prison. Staff salaries included the following payments made to a technical writer: Severance payment S 172,000 Reimbursement of traffic nes S 8,000 S 180,000 The taxation expenses were as follows: Hong Kong property tax 5 42,000 Salaries tax paid on behalf of managing director S 21,000 $ 63,000 The company paid $10,000 to a supplier as damages to cancel a six months contract for the purchase of paper. The company broke this contract because it found a cheaper source of supply. {9) Contributions to the retirement fund comprise the following: Provision for annual contribution to registered scheme {representing 18% of individual staff salaries), due in April 2020 $39,000 Provision for special contribution to the registered scheme due to the forecasted stormy economy in 2021. 5 50,000 $89,000 Records also show that the company had made a special payment of $30,000 to the same scheme in the year ended 31 March 2016. {10) The company director's room was originally covered with wooden flooring. In the current year of assessment, the company decided to dismantle the wooden floor and install black carpet. {11) In January 2019 the company entered into an agreement with a university in country A to carry out research on the development of an eco-friendly printing method. During the current year of assessment, the company paid $170,000 to the university. {12) Tax depreciation allowance as agreed with the Inland Revenue Department for the year of assessment was $157,000. Required: Compute the prots tax liability for Bookcentre Ltd for the year of assessment 2019/20 (ignore provisional tax and tax rebate). Tax computation in proper format and all related workings (if any) must be shown. (20 marks) {Please note that candidates are not required to provide explanations for tax treatments adopted)