Nyumbani Real estate developers Ltd is a company engaged in real estate development. The company commenced construction of 20 residential houses and a shopping mall for lease. The houses and mall were completed on 30 June 2020 and were ready for sale and leases. The company commenced operations in the second half of the year 2020, they completed transactionswith the following details. 1. Selling price per house was Sh.18,500,000 2. Cost of acquisition of land was Sh.45,000,000 per acre 3. Materials used in building one house cost Sh.3,480,000 inclusive of value added tax (VAT) of 16% 4. Drawings for the houses and related architectural design fess were a total of 450,000 net of VAT 5. Fees for quantity surveyors, civil engineers and electrical engineers for the houses amounted to Sh.1,740,000 inclusive of VAT 6. Cost of sewage and drainage system amounted to Sh.4,840,000 for the entire development 7. A second hand bulldozer was purchased for Sh.800,000 and used in land excavation within the entire land 8. A saloon car used by the site manager was valued at Sh.900,000 as at 30June 2020. The car had been purchased at the beginning of the year at Sh.1,500,000. The car was used in the maintenance of the estate and shopping mall 9. The labour wages for the construction workers on the entire site were Sh.600,000 per month up to 30 June 2020. 10. The entire project was financed by ACDC Bank with a loan of Sh.80.000.000 at an interest of 10% per annum. The loan was to be repaid in full on completion and sale of the houses. The loan was granted on 1 January 2020, and the interest on loan was payable at the end of each year. The loan was however repaid in full on 1 September 2020. Double-click to 11. Pavement and roads within the whole estate were built at a cost Sh.6,000,000. A playground was also constructed at a cost of Sh.840,000 but for use by house owners only. 12. The shopping mall comprised shops whose construction cost was 1,200,000, gymnasium Sh.450,000 and offices Sh.600.000. The shopping mall was leased on 1 July 2020 at Sh.1,400,000 per month. Maintenance expenses per month amounted to Sh.400,000. The company incurred cost sh.400.000, water meter 180.000and electricity deposits sh.360,000 before leasing 13. Estate power lines costs sh.800,000 and covered the residential estate and shopping mall. 14. The loan was shared between estate development and shopping mall at sh.4000,000 and sh.16,000,000 respectively. 15. All the houses were sold during the year ended year ended 2014 16. Assume that deductible costs and allowances were to start on 1st July 2020 after commencement of operations. Required: i. With reference to the VAT Act explain the VAT registration position of real estate development companies and advice Nyumbani Real estate developers Ltd on their whether they are required to register for VAT (4 marks) Total taxable profit or loss from the sale of houses (10 marks) Taxable rental income or loss for the shopping mall (6 Marks) . Nyumbani Real estate developers Ltd is a company engaged in real estate development. The company commenced construction of 20 residential houses and a shopping mall for lease. The houses and mall were completed on 30 June 2020 and were ready for sale and leases. The company commenced operations in the second half of the year 2020, they completed transactionswith the following details. 1. Selling price per house was Sh.18,500,000 2. Cost of acquisition of land was Sh.45,000,000 per acre 3. Materials used in building one house cost Sh.3,480,000 inclusive of value added tax (VAT) of 16% 4. Drawings for the houses and related architectural design fess were a total of 450,000 net of VAT 5. Fees for quantity surveyors, civil engineers and electrical engineers for the houses amounted to Sh.1,740,000 inclusive of VAT 6. Cost of sewage and drainage system amounted to Sh.4,840,000 for the entire development 7. A second hand bulldozer was purchased for Sh.800,000 and used in land excavation within the entire land 8. A saloon car used by the site manager was valued at Sh.900,000 as at 30June 2020. The car had been purchased at the beginning of the year at Sh.1,500,000. The car was used in the maintenance of the estate and shopping mall 9. The labour wages for the construction workers on the entire site were Sh.600,000 per month up to 30 June 2020. 10. The entire project was financed by ACDC Bank with a loan of Sh.80.000.000 at an interest of 10% per annum. The loan was to be repaid in full on completion and sale of the houses. The loan was granted on 1 January 2020, and the interest on loan was payable at the end of each year. The loan was however repaid in full on 1 September 2020. Double-click to 11. Pavement and roads within the whole estate were built at a cost Sh.6,000,000. A playground was also constructed at a cost of Sh.840,000 but for use by house owners only. 12. The shopping mall comprised shops whose construction cost was 1,200,000, gymnasium Sh.450,000 and offices Sh.600.000. The shopping mall was leased on 1 July 2020 at Sh.1,400,000 per month. Maintenance expenses per month amounted to Sh.400,000. The company incurred cost sh.400.000, water meter 180.000and electricity deposits sh.360,000 before leasing 13. Estate power lines costs sh.800,000 and covered the residential estate and shopping mall. 14. The loan was shared between estate development and shopping mall at sh.4000,000 and sh.16,000,000 respectively. 15. All the houses were sold during the year ended year ended 2014 16. Assume that deductible costs and allowances were to start on 1st July 2020 after commencement of operations. Required: i. With reference to the VAT Act explain the VAT registration position of real estate development companies and advice Nyumbani Real estate developers Ltd on their whether they are required to register for VAT (4 marks) Total taxable profit or loss from the sale of houses (10 marks) Taxable rental income or loss for the shopping mall (6 Marks)