subject: TAXATION

TOPIC: CAPITAL ALLOWANCE

Question 2 Magnolia Son Bod was incorporated on 1 January 2012 and closes its accounts on 31 December every year. The following assets were acquired by Magnolia Sdo Bbd: a. Machinery On 13 October 2019, a machine costing RM65,000 was brought into Malaysia for business use. It was originally used for business in China. The net book value and the market value of the machine were RM34,500 and RM33,000, respectively. The company incurred RM10,000 to prepare the site for installation purposes. b. Delivery Van On 25 April 2016, a secondhand delivery van costing RM75,000 was bought on cash basis. The van was sold in July 2019 for RM30,000. C. BMW Car A BMW car was acquired under hire purchases for the use by the Finance Director in 2018 at a cost of RM180,000. The details of the hire purchase are: Deposit : RM40,000 paid on 20 August 2018 No of Installments : 60 monthly installments beginning September 2018 Usage : 70% for business use REQUIRED: Compute the Capital Allowances, Balancing Charges or Balancing Allowances (if any) for the above assets for all the relevant years of assessment up to year of assessment 2019. (10 Marks)Question 3 SHS Sdo Bud, a company resident in Malaysia is engaged with manufacturing precision tools for export. It makes up accounts annually to 31 December. The following are some of the assets owned by the company: Machinery A machinery costing RM55,000 was acquired for business in Vietnam on 1 August 2017. As the branch is downsizing its operation, this machine was brought into the business in Malaysia on 1 July 2018. The market value and net book value of the asset on the date of transfer were RM46,000 and RM50,000, respectively. A site was prepared for the installation of the machine and the cost incurred was RM8,900. Motor Vehicle A secondhand motor vehicle (a Toyota car) had been bought on hire purchase. A down payment of RM20,000 had been made on signing the agreement on 1 March 2018. The hire purchase price and the cash price of the motor vehicle were RM68,000 and RM60,0QQ respectively. The term of agreement stipulated that the balance of payment is to be made by 24 equal installments. The instalments are to be made up of RM2,000 each with the first installment due on 1 April 2018. It has been agreed by the Director General of Inland Revenue Board that 20% of the vehicle was used for personal purpose. REQUIRED: Compute the Capital Allowances for all relevant years of assessment up to year of assessment 2019. (10 Marks)