Question 7 (Modified from ACCA J16 F6 (6) Winner Ltd (WL) carries on business in Hong Kong as an investment company. WL's statement of profit or loss for the year ended 31 March 2022 is as shown below: Notes Gain from trading in Hong Kong listed shares Loss from trading in China listed shares Dividends from Hong Kong listed shares Dividends from China listed shares Gain from buying and selling foreign currencies Exchange gain (unrealised) from the year-end conversion of foreign currency deposits Interest income Rental income S 500,000 (30,000) 23,000 11.000 150,000 (1) (2) 20.000 24,000 120.000 818,000 330E Be (3) (4) (6) (7) Salaries and wages Rent and rates Contributions to retirement funds for staff Donation Interest expenses Audit and tax filing fees Depreciation Loss on the disposal of a fixed asset Miscellaneous expenses (all deductible) Net profit (300,000) (350,000) (36,000) (5,000) (31,000) (13,000) (40,000) (5,000) (5,000) (8) (8) (785,000) 33,000 Notes: (1) $ 6,000 Interest income comprises: Interest on RMB deposit with a bank in Hong Kong Interest on HK$ deposit (HK$100,000) with a bank in Hong Kong; used as security for a loan (as referred to in note (7) below) Interest on HK$ loan made and remitted to a director in Canada Total 1,000 17,000 24,000 (2) WL leased out part of its office for a short period and received total rentals of $120,000 for the year. (3) Salaries and wages comprise: Salaries and bonuses to staff Wages to a domestic helper for use by WL's director 200,000 100,000 300.000 (4) The rent and rates were paid in respect of: WL's office The director's residence $ 200,000 150,000 350.000 (5) Contributions to retirement funds comprise: Mandatory contributions to MPF schemes, 5% of basic salary Voluntary contributions to MPF schemes, for a director Special contributions to MPF schemes, one-off payment $ 10,000 4,000 22.000 36,000 (6) The donation was made in cash to the Community Chest of Hong Kong. (7 ) Interest expenses comprise: Interest on a loan from WL's shareholder Ms Wong Interest on a bank overdraft and credit line Interest on a bank loan of HK$100,000 for operational use; secured by the HK$ deposit (as referred to in note (1) above) $ 17,000 12,000 2.000 31,000 (8) The total accounting depreciation charge for the year of $40,000, was calculated based on the book value of WL's fixed assets as at 31 March 2022. During the year, the following additions/disposals were made: Date 1 April 2021 4 March 2022 Particulars Replaced the office carpets at a cost of $70,000 Sold a motor car for $31,000. The net book value of the car was $36,000 (9) The tax depreciation schedules in WL's 2020/21 tax return showed tax written down values carried forward to 2021/22 for its 20% and 30% plant and machinery pools of $20,000 and $30,000 respectively. Required: Prepare Winner Ltd's profits tax computation for the year ended 31 March 2022, showing the net assessable profit/adjusted loss and profits tax payable, if any. Clearly identify both the year of assessment and the basis period and show all workings, including the depreciation allowance calculation. You may use the template provided as a guide. [Check figures: Depreciation allowance for plant and machinery: $4,000; Balancing charge: $1,000; Adjusted loss: $2,400) (Hint: Items not required to be adjusted in the tax computation will still score marks if they do NOT appear in the tax computation. You are NOT required to separately show or explain these items unless the question specifically requires you to do so. Question 7 (Modified from ACCA J16 F6 (6) Winner Ltd (WL) carries on business in Hong Kong as an investment company. WL's statement of profit or loss for the year ended 31 March 2022 is as shown below: Notes Gain from trading in Hong Kong listed shares Loss from trading in China listed shares Dividends from Hong Kong listed shares Dividends from China listed shares Gain from buying and selling foreign currencies Exchange gain (unrealised) from the year-end conversion of foreign currency deposits Interest income Rental income S 500,000 (30,000) 23,000 11.000 150,000 (1) (2) 20.000 24,000 120.000 818,000 330E Be (3) (4) (6) (7) Salaries and wages Rent and rates Contributions to retirement funds for staff Donation Interest expenses Audit and tax filing fees Depreciation Loss on the disposal of a fixed asset Miscellaneous expenses (all deductible) Net profit (300,000) (350,000) (36,000) (5,000) (31,000) (13,000) (40,000) (5,000) (5,000) (8) (8) (785,000) 33,000 Notes: (1) $ 6,000 Interest income comprises: Interest on RMB deposit with a bank in Hong Kong Interest on HK$ deposit (HK$100,000) with a bank in Hong Kong; used as security for a loan (as referred to in note (7) below) Interest on HK$ loan made and remitted to a director in Canada Total 1,000 17,000 24,000 (2) WL leased out part of its office for a short period and received total rentals of $120,000 for the year. (3) Salaries and wages comprise: Salaries and bonuses to staff Wages to a domestic helper for use by WL's director 200,000 100,000 300.000 (4) The rent and rates were paid in respect of: WL's office The director's residence $ 200,000 150,000 350.000 (5) Contributions to retirement funds comprise: Mandatory contributions to MPF schemes, 5% of basic salary Voluntary contributions to MPF schemes, for a director Special contributions to MPF schemes, one-off payment $ 10,000 4,000 22.000 36,000 (6) The donation was made in cash to the Community Chest of Hong Kong. (7 ) Interest expenses comprise: Interest on a loan from WL's shareholder Ms Wong Interest on a bank overdraft and credit line Interest on a bank loan of HK$100,000 for operational use; secured by the HK$ deposit (as referred to in note (1) above) $ 17,000 12,000 2.000 31,000 (8) The total accounting depreciation charge for the year of $40,000, was calculated based on the book value of WL's fixed assets as at 31 March 2022. During the year, the following additions/disposals were made: Date 1 April 2021 4 March 2022 Particulars Replaced the office carpets at a cost of $70,000 Sold a motor car for $31,000. The net book value of the car was $36,000 (9) The tax depreciation schedules in WL's 2020/21 tax return showed tax written down values carried forward to 2021/22 for its 20% and 30% plant and machinery pools of $20,000 and $30,000 respectively. Required: Prepare Winner Ltd's profits tax computation for the year ended 31 March 2022, showing the net assessable profit/adjusted loss and profits tax payable, if any. Clearly identify both the year of assessment and the basis period and show all workings, including the depreciation allowance calculation. You may use the template provided as a guide. [Check figures: Depreciation allowance for plant and machinery: $4,000; Balancing charge: $1,000; Adjusted loss: $2,400) (Hint: Items not required to be adjusted in the tax computation will still score marks if they do NOT appear in the tax computation. You are NOT required to separately show or explain these items unless the question specifically requires you to do so