er to the Income (and Corporation) Tax Act of your territory ACTIVITY 7.1. Computing Corporation Tax Liability Instructions: You are asked to compute the corporation tax liability of the Omera Electrica company using the income statement given below and to provide answers to questio tems a and b below Corporation Tax Computation Omera Electrical Industries Ltd for the 12 Months ended 31 December 201X Income Statement Notes Turnover Cost of Sales Gross Profit Other Income Rent Interest 6,500,000 2,925,000 3,575,000 60,000 20,000 80,000 3,655,000 Expenses Director's Fees Salaries Wages Employer NIS Contributions Loss on Disposal of Plant & Equipment Vehicle Expenses Insurance Aircondition Building M Depreciation Marketing and Promotions 360,000 1,240,000 150,800 10,000 52,000 84,000 24,000 72,000 aintenance 250,000 70,000 MGMT3051 Taxation Subscriptions & Membership Professional Fees Bad Debt Expenses Telephones 7,200 80,000 60,000 32,000 84,000 4 Utilities 2,400 Entertainment Donations Net Profit Before Tax 50,000 3,167,600 487,400 Notes to the Income Statement 1. The depreciation policy of the company is to use rates of depreciation in keeping with the nature of the machinery it uses. The actual Wear and Tear allowance for tax purposes this year is much greater, equal to $420,000 Marketing and Promotional Expenses-$50,000 of the total was incurred in participating in a trade fare in an overseas market. The government is giving an incentive this year to facilitate the growth in export markets by allowing the deduction of 150% of this type of expense for tax purposes Professional Fees- This includes legal fees of $ 40,000 incurred in defending a legal 2. 3. action brought against the comany for infringement of patent rights by a competitor in the industry 4. Bad Debt Expenses- This amount is made up of write off $25,000 for debt now considered unrecoverable as the customer has gone into liquidation. The balance is a general provision made on the basis of past experience that a small percentage of customers fail to honor their debts Entertainment expenses were solely for the purpose of promoting the business to its corporate clients. Donations include an amount of $10,000 to cultural activities and $10,000 to sports clubs. The government is also giving an incentive so as to promote social awareness and responsibility by business persons and allows 150% of these expenses as tax deductible up to a limit of $1,000,000 6. Required e the Corporation Tax Liability the Omera Electrical Industries Ltd. for the Financial Year just ended, given a Corporation Tax Rate of 259% er to the Income (and Corporation) Tax Act of your territory ACTIVITY 7.1. Computing Corporation Tax Liability Instructions: You are asked to compute the corporation tax liability of the Omera Electrica company using the income statement given below and to provide answers to questio tems a and b below Corporation Tax Computation Omera Electrical Industries Ltd for the 12 Months ended 31 December 201X Income Statement Notes Turnover Cost of Sales Gross Profit Other Income Rent Interest 6,500,000 2,925,000 3,575,000 60,000 20,000 80,000 3,655,000 Expenses Director's Fees Salaries Wages Employer NIS Contributions Loss on Disposal of Plant & Equipment Vehicle Expenses Insurance Aircondition Building M Depreciation Marketing and Promotions 360,000 1,240,000 150,800 10,000 52,000 84,000 24,000 72,000 aintenance 250,000 70,000 MGMT3051 Taxation Subscriptions & Membership Professional Fees Bad Debt Expenses Telephones 7,200 80,000 60,000 32,000 84,000 4 Utilities 2,400 Entertainment Donations Net Profit Before Tax 50,000 3,167,600 487,400 Notes to the Income Statement 1. The depreciation policy of the company is to use rates of depreciation in keeping with the nature of the machinery it uses. The actual Wear and Tear allowance for tax purposes this year is much greater, equal to $420,000 Marketing and Promotional Expenses-$50,000 of the total was incurred in participating in a trade fare in an overseas market. The government is giving an incentive this year to facilitate the growth in export markets by allowing the deduction of 150% of this type of expense for tax purposes Professional Fees- This includes legal fees of $ 40,000 incurred in defending a legal 2. 3. action brought against the comany for infringement of patent rights by a competitor in the industry 4. Bad Debt Expenses- This amount is made up of write off $25,000 for debt now considered unrecoverable as the customer has gone into liquidation. The balance is a general provision made on the basis of past experience that a small percentage of customers fail to honor their debts Entertainment expenses were solely for the purpose of promoting the business to its corporate clients. Donations include an amount of $10,000 to cultural activities and $10,000 to sports clubs. The government is also giving an incentive so as to promote social awareness and responsibility by business persons and allows 150% of these expenses as tax deductible up to a limit of $1,000,000 6. Required e the Corporation Tax Liability the Omera Electrical Industries Ltd. for the Financial Year just ended, given a Corporation Tax Rate of 259%