Green Country Limited is a distributor of domestic garden appliances throughout New Zealand and also carries out a number of other business transactions. Set out below is a list of balances extracted from the adjusted trail balance of the company as at financial year end date 31 March 2019: Accounts with Debit Balancese Revaluation Loss Building Depreciation Building Depreciation Plant & Equipment e Depreciation Vehicle Impairment Vehicle Purchases e Doubtful Debtse Bad Debts Audit Fees e Donation to religious organisations in New Zealand Dividends paid (Net) Interest Expense Expenditure related to Rental of Office Building Inventory as at 1 April 2018 Other Expensese Net Loss Brought Forward 1 April 2018 Provisional Taxe Tax paid on Overseas Income Fringe Benefit Taxe Resident Withholding Tax for Dividends received Accommodation provided to an employee as part of remuneration package, Associated Persons' Remuneratione Use of Money Interest IRD Salaries and Wages (Net) PAYE KiwiSaver Contributions ACC Levies Bonus, gratuity and retiring allowance to employees Resident Withholding Tax on Contract Income Contract Expenses e Accounts with Credit Balancese Interest Income (Net) Gain from Revaluation of Shares Available for sale Gains from Revaluation of shares Held for trading Income Dividend Income (Net) Rental Income of Office Building Contract Income e Overseas Income Amount ($) 140,000 60,000 190,000 75,000 5,000 17,024,000 10,000 20,000 40,000 35,000 216,000 150,000 320,000 250,000+ 830,000 114,000 120,000 50,000 58,000+ 10,000+ 36,000 313,000 22,000 1,820,000 450,000 106,000 25,000 43,000 15,000 480,000 te Amount ($) 18,000+ 500,000 600,000 34,229,000 144,000 240,000 520,000 175,000 Additional Notes: Income for the year ended 31 March 2019 consists of the following: Salese 23,529,000 Income from trade tie arrangement Note le 1,000,000 Gains from sale of shares Note 2 3,000,000 Licensing agreements receipts Note 3 e 500,000 Land Transactions Note 4 e 5,500,000 Income in relation to s CW1 Income Tax Act 2007 e 300.000 Income in relation to s CX42 Income Tax Act 20072 400,000 Totale 34,229,000 le Note 1: Green Country Limited entered into an exclusive arrangement with an Oil Company to only sell its brand of petrol for a period of 10 years. Green Country Limited also undertook that it would not establish a new service station business within five miles of its existing business for a period of five years without also agreeing to sell Shell products. Note 2: Green Country Limited systematically bought and sold shares. There was substantial repetition and turnover in buying and selling the sharese Note 3: Green Country Limited entered into a series of "licence, agreements" with various companies to supply information and manufacturing data to the companies and agreed to teach their technicians how to grow a new type of KIWI fruit. Note 4: The following land transactions were undertaken by Green Country Limited: Purchased a 50 hectare farm in 1 July 2013 for $2 million $4,000,000 and sold the land to a developer 30 June 2018 for $4 million. The local council rezoned the land from farming to residential in December 2015. About 22% of the profit on sale resulted from the zoning change.e Purchased 10 acres, containing a house, garage, and $900,000 barn for $1,220,000. The land value portion was $420,000. Council approval was obtained for a subdivision of seven acres, which was carried out, and the land subsequently sold for $900,000. Costs involved in the subdivision amounted to $55,000 including professional services of surveyor, solicitor and valuer; fencing, felling and planting work, and the excavation of a driveway; removal of pine trees, a bush regeneration programme, stock-proof fencing, a site survey, the excavation of a driveway, and the planting of trees. The buildings and one acre of the remaining three acres are used for the Green Country Limited's restoration businesse Made improvements costing $60,000 to a piece of land $600,000 that was purchased in 2000 for $400,000. The improvements (not minor) were made on August 2008 and the land disposed for $600,000 in April 2018 e TOTAL $5,500,0002 The cost of inventory as at 31 March 2019 is $225,000 and the net realisable value of the inventory is $200.000.- In accordance with the Income Tax Act 2007, Green Country Limited has satisfied the continuity of shareholder test and therefore the company is allowed to carry forward the previous years' loss. The net tax loss brought forward from previous years is $70,000. The tax depreciation for the year ended 31 march 2019 are as follows: The annual tax depreciation rate for buildings is 0% > The total tax depreciation for Plant and Equipment is $120,000 > The total tax depreciation for Vehicles is $80,000 The provisional tax account for year ended 31 March 2019 is as follows: Provisional Tax A/C Date Accounts Amount Date Accounte Amount le 1/4/2018 Balance b/de 150,000 31/3/2019 Tax Payable 150,000 9/5/2018 Banke 40,000 31/3/2009 Balance c/de 120,000 28/8/2018 Banke 40,000 e 15/1/2019 Banke 40,000 e 270,000 e 270.0004 le Details of expenditure related to rental of office building is provided below: $2 Rental Agency Commissione 25,000 Apportionment of Repairs and Maintenance 173,000 Apportionment of Insurance e 5,00044 Apportionment of rates e 9,000 Apportionment of Building Depreciation 23,000 Apportionment of interest expensee 50,0004 Administratione 35,000 e 320.000 de An examination of the ledger account, shows that other expenses comprises of the following: $e Professional and consulting feese 40,000 Bank service chargese 10,000 Fines and penaltiese 11,000+ Entertainment expenses 25,000 Repairs and Maintenance 240,000 Loss caused by misappropriation by employeese 5.0004 Expenses in relation to s CW1 Income Tax Act 2007 e 150,000 Expenses in relation to s CX42 Income Tax Act 2007e 250,0004 Insurance e 40,000 Rates e 59,000 830.000 Entertainment expenses Entertainment that promotes business where the public has the same access as the $8052 employees, business contacts and people associated with the businesse Freebies given to customers promoting businesse $1,4902 Meals employees bought while travelling on businesse $1,9782 le Snacks and drinks served at business's trade displaye $1,1962 Overseas entertainment provided to promote the company's productse $12,217ele Entertainment at sports and cultural events (including in a corporate box) $1,703e Bottles of wine provided to each customer who buys a company's product $4602 amounting to more than $1,000 Boat hire and providing food and drinks to people on ite 4,001e Food and drink provided for social events in an area set aside for senior employees 1,150 Totale $25,000 le le Required: Prepare the Financial Statements Summary (Extract of IR10: all boxes until box 29) for year ended 31 March 2019 for Green Country Limited Question 24 Prepare the Income Tax Return Companies (IR 4: Boxes in Sections 12-29) for the period 1 April 2018 to 31 March 2019 for Green Country Limited Green Country Limited is a distributor of domestic garden appliances throughout New Zealand and also carries out a number of other business transactions. Set out below is a list of balances extracted from the adjusted trail balance of the company as at financial year end date 31 March 2019: Accounts with Debit Balancese Revaluation Loss Building Depreciation Building Depreciation Plant & Equipment e Depreciation Vehicle Impairment Vehicle Purchases e Doubtful Debtse Bad Debts Audit Fees e Donation to religious organisations in New Zealand Dividends paid (Net) Interest Expense Expenditure related to Rental of Office Building Inventory as at 1 April 2018 Other Expensese Net Loss Brought Forward 1 April 2018 Provisional Taxe Tax paid on Overseas Income Fringe Benefit Taxe Resident Withholding Tax for Dividends received Accommodation provided to an employee as part of remuneration package, Associated Persons' Remuneratione Use of Money Interest IRD Salaries and Wages (Net) PAYE KiwiSaver Contributions ACC Levies Bonus, gratuity and retiring allowance to employees Resident Withholding Tax on Contract Income Contract Expenses e Accounts with Credit Balancese Interest Income (Net) Gain from Revaluation of Shares Available for sale Gains from Revaluation of shares Held for trading Income Dividend Income (Net) Rental Income of Office Building Contract Income e Overseas Income Amount ($) 140,000 60,000 190,000 75,000 5,000 17,024,000 10,000 20,000 40,000 35,000 216,000 150,000 320,000 250,000+ 830,000 114,000 120,000 50,000 58,000+ 10,000+ 36,000 313,000 22,000 1,820,000 450,000 106,000 25,000 43,000 15,000 480,000 te Amount ($) 18,000+ 500,000 600,000 34,229,000 144,000 240,000 520,000 175,000 Additional Notes: Income for the year ended 31 March 2019 consists of the following: Salese 23,529,000 Income from trade tie arrangement Note le 1,000,000 Gains from sale of shares Note 2 3,000,000 Licensing agreements receipts Note 3 e 500,000 Land Transactions Note 4 e 5,500,000 Income in relation to s CW1 Income Tax Act 2007 e 300.000 Income in relation to s CX42 Income Tax Act 20072 400,000 Totale 34,229,000 le Note 1: Green Country Limited entered into an exclusive arrangement with an Oil Company to only sell its brand of petrol for a period of 10 years. Green Country Limited also undertook that it would not establish a new service station business within five miles of its existing business for a period of five years without also agreeing to sell Shell products. Note 2: Green Country Limited systematically bought and sold shares. There was substantial repetition and turnover in buying and selling the sharese Note 3: Green Country Limited entered into a series of "licence, agreements" with various companies to supply information and manufacturing data to the companies and agreed to teach their technicians how to grow a new type of KIWI fruit. Note 4: The following land transactions were undertaken by Green Country Limited: Purchased a 50 hectare farm in 1 July 2013 for $2 million $4,000,000 and sold the land to a developer 30 June 2018 for $4 million. The local council rezoned the land from farming to residential in December 2015. About 22% of the profit on sale resulted from the zoning change.e Purchased 10 acres, containing a house, garage, and $900,000 barn for $1,220,000. The land value portion was $420,000. Council approval was obtained for a subdivision of seven acres, which was carried out, and the land subsequently sold for $900,000. Costs involved in the subdivision amounted to $55,000 including professional services of surveyor, solicitor and valuer; fencing, felling and planting work, and the excavation of a driveway; removal of pine trees, a bush regeneration programme, stock-proof fencing, a site survey, the excavation of a driveway, and the planting of trees. The buildings and one acre of the remaining three acres are used for the Green Country Limited's restoration businesse Made improvements costing $60,000 to a piece of land $600,000 that was purchased in 2000 for $400,000. The improvements (not minor) were made on August 2008 and the land disposed for $600,000 in April 2018 e TOTAL $5,500,0002 The cost of inventory as at 31 March 2019 is $225,000 and the net realisable value of the inventory is $200.000.- In accordance with the Income Tax Act 2007, Green Country Limited has satisfied the continuity of shareholder test and therefore the company is allowed to carry forward the previous years' loss. The net tax loss brought forward from previous years is $70,000. The tax depreciation for the year ended 31 march 2019 are as follows: The annual tax depreciation rate for buildings is 0% > The total tax depreciation for Plant and Equipment is $120,000 > The total tax depreciation for Vehicles is $80,000 The provisional tax account for year ended 31 March 2019 is as follows: Provisional Tax A/C Date Accounts Amount Date Accounte Amount le 1/4/2018 Balance b/de 150,000 31/3/2019 Tax Payable 150,000 9/5/2018 Banke 40,000 31/3/2009 Balance c/de 120,000 28/8/2018 Banke 40,000 e 15/1/2019 Banke 40,000 e 270,000 e 270.0004 le Details of expenditure related to rental of office building is provided below: $2 Rental Agency Commissione 25,000 Apportionment of Repairs and Maintenance 173,000 Apportionment of Insurance e 5,00044 Apportionment of rates e 9,000 Apportionment of Building Depreciation 23,000 Apportionment of interest expensee 50,0004 Administratione 35,000 e 320.000 de An examination of the ledger account, shows that other expenses comprises of the following: $e Professional and consulting feese 40,000 Bank service chargese 10,000 Fines and penaltiese 11,000+ Entertainment expenses 25,000 Repairs and Maintenance 240,000 Loss caused by misappropriation by employeese 5.0004 Expenses in relation to s CW1 Income Tax Act 2007 e 150,000 Expenses in relation to s CX42 Income Tax Act 2007e 250,0004 Insurance e 40,000 Rates e 59,000 830.000 Entertainment expenses Entertainment that promotes business where the public has the same access as the $8052 employees, business contacts and people associated with the businesse Freebies given to customers promoting businesse $1,4902 Meals employees bought while travelling on businesse $1,9782 le Snacks and drinks served at business's trade displaye $1,1962 Overseas entertainment provided to promote the company's productse $12,217ele Entertainment at sports and cultural events (including in a corporate box) $1,703e Bottles of wine provided to each customer who buys a company's product $4602 amounting to more than $1,000 Boat hire and providing food and drinks to people on ite 4,001e Food and drink provided for social events in an area set aside for senior employees 1,150 Totale $25,000 le le Required: Prepare the Financial Statements Summary (Extract of IR10: all boxes until box 29) for year ended 31 March 2019 for Green Country Limited Question 24 Prepare the Income Tax Return Companies (IR 4: Boxes in Sections 12-29) for the period 1 April 2018 to 31 March 2019 for Green Country Limited