taxation

Points: 1 The Elyen Armoury consists of forges, storehouses and testing areas, home to the weapons and batile-armour of the elves of the Three Kingdoms. It was decided to change the wooden shafts of the arrows and spears used by the elves to a new lightweight alloy called mithnil. Mithrli increased the weapons' kill-ratios by seventy per cent (70\%). Overlaying mithrit on elven battle-armour made the battle-suits virtually impervious - reducing battlefield fatalibes and severe battli related injories by over forty-five per cent (45\%). The expenditure to do the incorporation of mithril alloy into the forges and testing areas amounted to $10,000,000 Elven Gold Crescents. The Three Kingdoms sought to have this amount deducted from the considerable revenue generaled by the hiring of eiven mercenary units throughout Middle Earth. The Middle Earth Taxation Authority dismissed the claims of the three Elven Kings that the amounts expended as above were deductible from revenue, contending that they were expenditures in the nature of capital and hence not deductible. The Elven Kings appealed this decision. Based on your detailed case knowledge, what would you expect the outcome of the appeal to be? A. The appeal will be unsuccessful and the amounts will not be deductible from revenueiprofits as they are revenue amounts B. The correct answer is not supplied as an option C. The appeal will be unsuccessful and the amounts will not be deductible from revenuelprofits as they are capital amounts D. The appeal will be successful and the amounts will be deductible from revenue/profits as they are revenue amounts E. The appeal will be successful and the amounts will be deductible from revenue/profits as they are capital amounts Question 12 of 108 Points: 1 One of the badges of trade is the capital expense versus revenue expense test of income True False