Question 1

Ben Smith and Elias Jones commenced a partnership in a business erecting pergolas and garden furniture. After their first year of trading they showed a net profit of $50 000. In their partnership agreement, profits are shared equally between the partners after adjusting for the following:

Partners salaries	Smith $10 000, Jones $10 000
Interest on capital	Jones $5000
Interest paid on advance from Smith	$3000
Interest on drawings	Jones $2000

Required:

(a) Calculate s.90 partnership net income.

(b) Preapre a distribution statement.

(c) Calculate assessable income.

Question 2

Franco is the owner of a garden maintenance and landscaping business which services the Perth metropolitan area. He drives a Holden Vitoria Utility which he purchased in 2006 at a cost of $32 000. It has a 3200-cc capacity engine and it is primarily used for picking up supplies and transporting materials and tools to his various jobs.

Frank was conscientious with his record keeping and for this reason kept a comprehensive log book for the current tax year.

Information included in his log book included the following:

Travel to suppliers and customers	2300 km
Travel from home to work	1890 km
Private family travel	160 km
Total	4350 km

Franco's running costs for the year including the decline in value (depreciation) totalled $12 800.

Required:

(a) Using the information above, calculate the maximum amount that Frank would be able to include as a deduction for car expenses for the year from the methods available to him.

(b) What other vehicles are treated in the same way as Franco's?