Katondo Manufacturing Company (KMC) plc is a Zambian resident company engaged in manufacturing operations which is registered for Value Added Tax. The company listed its shares on the Lusaka Securities Exchange two (2) years ago when it offered 25% of the ordinary shares to indigenous Zambians. In March 2020, the company issued a further 20% of its ordinary shares to indigenous Zambians and as a result 45% of the shares of the company are now held by indigenous Zambians. KMC plc made a profit for the year, as per accounts, of K5,702,080 for the year ended 31 December 2020. This profit figure was arrived at after taking into account the following: (1) Investment income comprising rental income of K180,000, royalties amounting to K136,000, dividends from shares of non-mining companies listed on the LuSE amounting to K124,000, fixed deposit interest K23,800 and management and consultancy fees of K289,000. These were the actual amounts received in each case, withholding tax was deducted at source and paid on the appropriate due dates. (2) Staff costs which included an annual salary for the Marketing Director of K650,000 who is accommodated in a company owned house for which he does not pay rent, employee training costs of K160,000, employee relocation costs of K340,000, loans to employees written off amounting to K380,000, employees golf club subscriptions of K18,000, employees professional subscriptions of K60,000, wages for casual workers of K56,000, fines of K25,000 for breaching labour laws and other employee's salaries of K29,274,000. (3) Legal fees which included legal fees in connection with issue of ordinary shares to indigenous Zambians of K13,800, legal fees for trade debt collection of K14,400, legal fees for recovery of loans from former employees of K10,500, a premium paid to acquire the right of use of a popular brand name for a period of 20 years, amounting to K300,000 and legal fees incurred on the renewal of a lease of business premises of K18,500 (4) Bad debts expenses which included: K Trade debts written off 88,000 Increase in specific provision 16,000 Decrease in general provision (36,800) Trade debts previously written off subsequently recovered (17,500) 49,700 (5) Miscellaneous operating expenses which included: K Selling and marketing expenses 275,600 Theft of money by the finance director 320,000 Theft of goods by the companys security guards 50,000 Depreciation of tangible non-current assets 168,000 Loss on disposal of assets 60,000 Christmas gifts to employees (food hampers costing K180 each) 18,000 Gifts to customers of Kamuchanga Plcs branded wall clocks (Costing K250 per customer) 30,000 Provisional income tax 2,023,000 2,944,600 The provisional income tax is the amount of provision income tax paid during the tax year 2020. Other Information Implements, plants and machinery On 1st January 2020, company held the following implements, plant and machinery which were acquired at the following VAT inclusive costs and brought into use on the following dates: Date Asset VAT inclusive cost K 10 March 2017 Delivery van (2,000cc) 104,400 20 April 2017 Old manufacturing equipment 928,000 16 October 2018 General plant and equipment 580,000 19 March 2019 Pool car (1,600cc) 127,600 During the year ended 31 December 2020, the following purchases and disposals of assets took place: Date VAT Inclusive Cost/(Proceeds) K 4 March 2020 Purchased Toyota Camry car (1,700cc) 174,000 16 July 2020 Purchased Toyota Fortuner motor car (2,600cc) 270,000 18 August 2020 Purchased new manufacturing plant 1,044,000 12 October 2020 Sold the delivery van (58,000) 15 November 2020 Sold old manufacturing equipment 348,000 20 Dec 2020 Sold poll car 150,600 The Toyota Camry car is the Human Resources Managers personal to holder motor car and the Toyota Fortuner motor car is the Marketing Directors personal to holder motor car. Buildings On 1 February 2020 the company completed the construction of a building at VAT exclusive cost of K5,000,000 which was brought into use immediately. The building comprised the following items: K Land 1,500,000 Engineering drawing office 400,000 Showroom 200,000 Factory 2,600,000 Administration offices 300,000 5,000,000 REQUIRED (a) Calculate the maximum capital allowances claimable by Katondo plc on the following assets held in the tax year 2020: (i) The capital allowances on implements, plant and machinery (12 marks) (ii) The capital allowances on buildings (6 marks) (b) Compute the final taxable business profit after capital allowances for Katondo plc for the tax year 2020. (14 marks) (c) Compute the income tax payable by the company for the charge year 2020.