QUESTION 2 Zhola Pvt Ltd is a company carrying on business in Zimbabwe as a manufacturer. The following information is furnished in respect of its business activities for the year of assessment ended 31 December 2022. $ Sales 3 300 000 Cost of sales (900 000) Gross Profit 2 400 000 Less Expenses Bad and Doubtful Debts 120 000 Research and Experiments 190 000 Motor vehicle repairs and Maintenance 150 000 Depreciation 110 000 Travelling Expenses 60 000 Import Duty on New Machinery 20 000 Audit Fees 12 000 Income Tax Advice 16 000 Zesa Connection Fees 28 000 Interest on loan to construct factory 52 000 Donations 300 000 General expenses 520 000 Proposed Dividends 90 000 (1 668 000) Operating Profit 732 000

Additional Information: Bad and doubtful debts are made up of the following: Bad debts proved to be irrecoverable $90 000 Provision for doubtful debts based on 10% of debtors $30 000 Total $120 000

50% of the research and experiments relate to expenditure on equipment acquired at the beginning of the year for purposes of the research and experiments.. Travelling Expenses Business Trip $40 000 Private expenses for the wife of the Managing Director $20 000 Total $60 000

Donations include: Manufacturers Association $60 000 Charitable $40 000 University of Zimbabwe $200 000 Total $300 000

General Expenses: Telephone expenses $80 000 Fire Insurance $20 000 Fuels and Electricity $420 000 Total $520 000

The company assets and their Income Tax Values (ITVs) at the beginning of 2022 were as follows: Cost ITV Motor Vehicles (Trucks) $200000 100000 Furniture & Fittings $100000 40000 Tractors $120000 60000 Plant & Machinery $240000 130000 Factory Building $1200000 900000

The company had claimed SIA on trucks and Tractors during the year ended 31 December 2021. No Special Initial Allowance (SIA) was claimed on the other assets in previous years. Additions to assets during the year were as follows:

Machinery $200000 2 Tonne Truck (second hand) $20000 New Office furniture $40000 Extension to factory building $12000

Required A Computation of the companys minimum taxable income or maximum assessed loss for the year ended 31 December 2022 including any tax payable if any (25 Marks).