SUBJECT TAX

New assets acquired during the year ended 30 April 2020 Renovation costs RM35,000 was incurred on 11 February 2020 for an extension to the showroom. Included in these renovation costs was a racking system costing RM5,000 and the balance of the expenditure was for tiling walls and doors and electrical installations. Motor car (non-commercial) A second-hand motor car was acquired on 18 January 2020 for RM102,000, for the use of Hanwoo's chief executive officer. The original cost of the car when new was RM165,000. 6. Hanwoo's Store is a trading company which has been in operation for five years and makes up its accounts to 30 April annually. The details of Hanwoo's existing non-current assets, including assets disposed of, and of new assets acquired in the year ended 30 April 2020 are shown in the report below: Fixed assets report Existing assets and assets disposed of during the year ended 30 April 2020 Showroom and office administration area Construction was completed on 12 December 2017 at a total cost of RM500,000. The costs relating to the office administration area are RM30,000. Air-conditioner The air-conditioner was acquired on 3 October 2018 for RM900 and capital allowances were claimed as a small value asset in the year of acquisition The air-conditioner was damaged due to a fire and was written off on 25 February 2020 Inventory grading machine (general) The machine was imported from Germany on 22 September 2018 for RM234,000 at the point of acquisition. There was a subsequent realised foreign exchange loss of RM4,000 on the purchase price. Required: a) Compute the capital allowances claimable, if any, by Hanwoors on its existing assets for YA 2020 as well as the balancing charge or balancing allowance on the disposal write off of the air-conditioner and the inventory grading machine. [12 marks] b) Compute the capital allowances claimable in respect of each of the new assets acquired by Hanwoo's during YA 2020. [8 marks] c) Describe the following as defined by case law. i. Plant and machinery [5 marks] 11. Industrial building The machine was sold to a supplier for RM240,000 on 29 December 2019. [5 marks] New assets acquired during the year ended 30 April 2020 Renovation costs RM35,000 was incurred on 11 February 2020 for an extension to the showroom. Included in these renovation costs was a racking system costing RM5,000 and the balance of the expenditure was for tiling walls and doors and electrical installations. Motor car (non-commercial) A second-hand motor car was acquired on 18 January 2020 for RM102,000, for the use of Hanwoo's chief executive officer. The original cost of the car when new was RM165,000. 6. Hanwoo's Store is a trading company which has been in operation for five years and makes up its accounts to 30 April annually. The details of Hanwoo's existing non-current assets, including assets disposed of, and of new assets acquired in the year ended 30 April 2020 are shown in the report below: Fixed assets report Existing assets and assets disposed of during the year ended 30 April 2020 Showroom and office administration area Construction was completed on 12 December 2017 at a total cost of RM500,000. The costs relating to the office administration area are RM30,000. Air-conditioner The air-conditioner was acquired on 3 October 2018 for RM900 and capital allowances were claimed as a small value asset in the year of acquisition The air-conditioner was damaged due to a fire and was written off on 25 February 2020 Inventory grading machine (general) The machine was imported from Germany on 22 September 2018 for RM234,000 at the point of acquisition. There was a subsequent realised foreign exchange loss of RM4,000 on the purchase price. Required: a) Compute the capital allowances claimable, if any, by Hanwoors on its existing assets for YA 2020 as well as the balancing charge or balancing allowance on the disposal write off of the air-conditioner and the inventory grading machine. [12 marks] b) Compute the capital allowances claimable in respect of each of the new assets acquired by Hanwoo's during YA 2020. [8 marks] c) Describe the following as defined by case law. i. Plant and machinery [5 marks] 11. Industrial building The machine was sold to a supplier for RM240,000 on 29 December 2019. [5 marks]