On 1 January 2019, Master Sdn. Bhd. acquired a sedan car for its sales team, to be used in the discharge of their sales and marketing duties. The company’s financial year-end falls on 30 September.

The details of the purchase are as follows:

Cash price Deposit paid

Hire purchase loan

RM 152,000

42,000 110,000

C39TM

 

The interest on the hire purchase is 4% per annum. The loan is repayable over 4 years, starting from January 2019.

Just 2 months after its purchase, the car was involved in an accident. RM 4,000 was spent on its repair.

On 1 August 2020, Master Sdn. Bhd. disposed of an office equipment for RM 4,000. The office equipment was purchased on 1 January 2020 for RM 9,000. The disposal was made on grounds of technical obsolesces and this reason has been accepted by the Inland Revenue Board.

Required:

1.            i)  Compute the capital allowances and residual expenditure of the motor car for the YA 2019 and YA 2020.

2.            ii)  Compute the capital allowances, residual expenditure and balancing

allowance/charge of the office equipment for the YA 2020.

Kawan Sdn. Bhd. (Kawan) was incorporated on 1 March 2020 and commenced operations on that day itself, with an authorised and issued share capital of RM 1,000,000. The company manufactures wooden furniture and has a financial year end of 31 December.

The statement of profit or loss for Kawan for the financial year ended 31 December 2020 is given as follows:

Revenue

Les: Cost of sales 1 Gross profit

Less: Expenses

Entertainment expenses 2 Pre-commencement expenses 3 Salaries and wages 4 Provision for doubtful debts 5 Infrastructure expenses 6 Travelling expenses 7 Licensing 8

Profit before tax

Notes:

1. The depreciation for furniture and fittings was RM

12,000 13,000 45,000

1,800 20,600 8,800 11,000

Note

RM

RM 405,000

(175,000) 230,000

(112,200) 117,800

11,500. This is included in the

C39TM

cost of sales.

2.            Entertainment expenses include promotional gifts at foreign trade fairs of RM 4,000; promotional samples of company’s products RM 5,000, and entertainment of customers RM 3,000.

3.            The pre-commencement expenses incurred in the month of January and February 2020 comprised of:

- Participation in career fairs to hire employees RM 7,000

- Payment to employment agencies RM 5,000

- Payment of RM 1,000 to a HR consultant in December 2018 to advise on recruitment strategy

4.            Salaries and wages include:

- Remuneration to disabled employees RM 8,000 - Salaries of directors RM 15,000

- EPF for directors RM 4,000

5.            The provision is made at 3% of outstanding debts.

6.            This amount relates to the reconstruction of the mini warehouse. Kawan did not claim capital allowance for this.

7.            This includes an amount of RM 3,000 for air fare to Australia. The vacation trip was provided to its chief executive officer.

8.            Licensing includes RM 10,000 paid to a company to use its timber extraction license to extract timber in a nearby forest.

Compute the chargeable income for Kawan Sdn. Bhd. for the YA 2020