Question 2 (a) Yaka Business Solutions (YBS) is VAT registered. It deals in office machines and computers. During the month of January 2019, YBS had the following transactions: January Transactions 3 Purchased 5photocopiers worth Shs 40 millionfrom X-Machines Ltd. 5 Sold a laptop for Shs 900,000 to Ciremo. 10 Paid telephone bills for Shs 1 million. 11 Paid for electricity Shs 200,000. 14 Sold a computer at Shs 1.2 million. 16 Paid travel expenses for salesmen of Shs 330,000. 17 National Water& Sewarage Corporation tax invoice amount was Shs 47,000; the business had a credit of Shs 15,000. 23 Sold a scanner at Shs 247,000. 25 Paid staff salaries Shs 5 million. 26 Sold a photocopier at Shs 12 million. 28 Purchased 3 printers at Shs 215,000 each. 30 Paid shop rent of Shs 800,000 to Geye Towers.Question 1 (a) Goodluck Produce Limited (GPL) operates a commercial farm in Bweyale. Kiryandongo District which grows maize. The maize is milled at the farm before being transported to the sales outlet in Kampala. The farm has been in operation since 1 January, 2015. Provided below is GPL's Statement of profit or losses and other comprehensive income for the year ended 31 December, 2018: Note Shs '000' Shs '000' Revenue 1.080.000 Less operating expenses 1 490.300 Gross profit 569.700 Less expenses Salaries 135.800 Depreciation 82,000 Donations 2 2.400 Provision for bad debts 29,800 Legal fees 3 40,000 Fuel expenses 82,000 Repairs and maintenance 4 5.500 Entertainment 5 18,700 Other expenses 8 45,000 471.200 Net profit 98,500 Notes: 1. Included in operating expenses is Shs 12 millionof wages paid to workers who harvested the maize on the managing director's personal farm. 2. Donations were paid to the village football club. None of the members of this club earns a living from playing football. 3. Included in the legal fees is Shs 3 millionwhich was paid to the National Environment Management Authority as a fine for having encroached on a wetland. 4. Included in the repairs cost is Shs 15 millionwhich was used to set up water and electricity works on the farm. 5. The amount relates to the staff end of year party hosted in Bweyale town. 6. Included in other expenses are the following amounts: Particulars Shs '000' Insurance premium on the life of the managing director 5,000 Supplies of fertilizers from Twekambe Shop (the shop does not have a tax identification number) 20,000 Advertising costs 12,000 Office rent in Bweyale town 8,000 Total 45,000 7. The tax written down values of the assets as at 1 January, 2018 were: Class 1 Class 2 Class 3 Class 4 Shs '000' Shs '000' Shs '000' Shs '000' 45,000 46,500 279,840 358,600 8. Assets bought during the year: 100 hand held hoes each at Shs 25,000. . 1 Desktop computer at Shs 2 million. . 2 maize milling machines at Shs 100 million. 9. Built an extension to the store at the outlet in industrial area Kampala at Shs 150 million. The store was put to use on 1 August, 2018. The old store had cost Shs 200 million to construct and was first used from 1 January, 2016 10. There were no assets sold during the year. Required: Compute GPL's chargeable income and tax liability for the year ended 31 December, 2018. (14 marks) (b) As per the Income Tax Act Cap 340explain the: (i) meaning of the word 'farm works' (4 marks) (ii) treatment of 'farm works' when computing tax liability. (2 marks) (Total 20 marks)