The City Limited : Income statement for the period ended 31 January 2023

Sales 7,770,000

Less: Cost of sales (5,268,00)

Gross Trading Profit 2,502,000

Other income:

Dividend income 108,000

Interest 17,000

Profit on sale 180,000

305,000

Operating costs Remuneration 850,000

Royalties 100,000

Miscellaneous expenses 1,165,000

Repairs and renewals 120,000

Loss on asset disposal 65,000

Depreciation 270,000

(2,570,000)

Finance costs Interest (35,000)

Profit before tax 202,000

12. The City Limited has tax losses brought forward at 1 October 2021 of:

Non-trading loan relationship loss 19,000

Capital loss 30,000

2.2- Explain the treatment of The Citys loan relationships, including the non-trade loan relationship credits brought forward.