QUESTION 1 HappieChappie (Pty) Ltd, a South African company with a February year-end, produces a diverse range of baby products. On 30 September 2021, the board of directors approved the CAPEX (capital expenditure) budget for HappieChappie (Pty) Ltd's 2022 year of assessment. All the expenditure will take place before the end of the company's 2022 year of assessment. Below is an extract from the memorandum of the board meeting: 1. Due to a material increase in demand for locally produced baby products HappyChappie (Pty) Lid bought two additional machines to be used in its manufacturing process on 1 October 2021. One of the machines is a second-hand machine which was bought for R1 230 000. The other machine is a brand new, unused machine which cost R3 500 000. HappyChappie (Pty) Lid spent an additional R70 000 on the installation of the new machine. 2. HappyChappie (Pty) Lid is exploring the option to deliver online baby products directly to customers' homes. To do this, the company bought a motorcycle at a cost of R90 000 on 1 October 2021. The Commissioner allows a four-year write-off period on motorcycles. 3. To have a competitive advantage, HappieChappie (Pty) realised that they need to register unique logos. An advertising company was identified to design these logos which will be registered as a trademark under the Trademark Act. On 30 November 2021, HappieChappie (Pty) Lid paid the advertising company R1 500 000 to design and register these logos. 4. In the prior year, HappyChappie (Pty) Lid signed a restraint of trade agreement with Nifty Nappies (Pty) Lid, a big competitor. According to the agreement R3 500 000 will be payable to HappyChappie (Pty) Lid over a period of five years. At the end of each year, it will be established if there was a breach of contract before any payments are made.5. Due to the increase in HappyChappie (Pty) Ltd's Head Office personnel, HappyChappie (Pty) Lid bought a new administrative office block from a developer at a total cost of R8 700 000 on 31 December 2021. 6. The security personnel recently striked due to their long working hours and the fact that they must travel long distances at short notice. On 30 October 2021, HappyChappie (Pty) Lid built three residential units at a cost of R220 000 per unit, so that the security personnel can live on these premises when on duty. The units will be basic apartments and provided free of charge. HappyChappie (Pty) Ltd also bought two apartments from a developer on 1 December 2021. These departments are within walking distance from the head office and will house non-resident contractors. The apartments cost R610 000 per apartment. 7. To support local upcoming entrepreneurs, HappyChappie (Pty) Lid bought a baby- toy design from a young designer at a cost of R720 000 on 16 January 2022. This design holds a promising return on investment. REQUIRED: Calculate, separately for points 1 - 7, the capital allowances that HappyChappie (Pty) Ltd may claim for the year of assessment ending 28 February 2022. Support your answer with references to relevant sections of the Income Tax Act. Round all amounts off to the nearest thousand rand and ignore any VAT implications