Chong, the owner of a retail business, prepares his accounts to 31 December annually. In June 2017, one of his lorries loaded with goods was stolen. The lorry was purchased in 2012 for RM80,000. The lorry was insured for RM60,000 and a premium of RM6,000, inclusive of RM 1,000 for the insurance of goods, was incurred.

The insurance company agreed to compensate Chong a sum of RM160,000, of which RM 50,000 was for the loss of the lorry. The amount received is included in the profit and loss account for the year ended 31 December 2017.

Required :- Discuss the tax treatment of the above covering the purchase and loss of the lorry , the insurance premium incurred and compensation received.