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Question DDD Ltd made a net profit before taxation of $3,000,000 for the financial year ending 31 December 20x8. The corporate tax rate for 20x8
Question DDD Ltd made a net profit before taxation of $3,000,000 for the financial year ending 31 December 20x8. The corporate tax rate for 20x8 was 15% while that of 20x7 was 16%. The current tax expense as computed from the tax computation schedule for the year ending 31 December 20x8 was $400,000 The following details relates to the company's assets, liabilities and disallowed expenses included in the net profit: (i) Specialised equipment Date of purchase Original cost Economic useful life Residual value Accounting depreciation method Double-declining method Capital allowance 1 January 20x7 $120,000 4 years S20,000 claimm 100% in the first year (ii) Development expenditures Date of capitalisation Cost of development Asset's useful life Tax life for capital allowance claim Equally over the first 2 vears 1 January 20x7 S200,000 4 years from 1 Jan 20x7 (iii) Rental received in advance Assume revenue is taxed at the point of receipt. 20x7 20x8 50,000 120,000 20,000 100,000 ning balance as at 1 Janu Cash received Question DDD Ltd made a net profit before taxation of $3,000,000 for the financial year ending 31 December 20x8. The corporate tax rate for 20x8 was 15% while that of 20x7 was 16%. The current tax expense as computed from the tax computation schedule for the year ending 31 December 20x8 was $400,000 The following details relates to the company's assets, liabilities and disallowed expenses included in the net profit: (i) Specialised equipment Date of purchase Original cost Economic useful life Residual value Accounting depreciation method Double-declining method Capital allowance 1 January 20x7 $120,000 4 years S20,000 claimm 100% in the first year (ii) Development expenditures Date of capitalisation Cost of development Asset's useful life Tax life for capital allowance claim Equally over the first 2 vears 1 January 20x7 S200,000 4 years from 1 Jan 20x7 (iii) Rental received in advance Assume revenue is taxed at the point of receipt. 20x7 20x8 50,000 120,000 20,000 100,000 ning balance as at 1 Janu Cash received
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