Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

TT Ltd. is a corporation carrying on business in Hong Kong and prepares its accounts to 31 March each year. During the year ended 31

TT Ltd. is a corporation carrying on business in Hong Kong and prepares its accounts to 31 March each year. During the year ended 31 March 2016, TT Ltd. conducted the following activities:

It incurred $800,000 on the renovation of its showroom which was not newly acquired. No depreciation allowance, if allowable, has been claimed in this regard.

It also purchased, with full cash payment of 200,000, a plastic manufacturing machinery specially and directly used for its manufacturing process. No depreciation allowance, if allowable, has been claimed in this regard.

It cancelled a lease of a warehouse and thus paid $100,000 in compensation to the landlord of the warehouse.

It made a payment of $500,000 to a retiring director who has agreed not to compete with taxpayer company after his retirement.

It operates a recognized retirement scheme which is a defined contribution scheme. It paid a special contribution of $3,000,000 to the scheme.

It paid a commission of $40,000 to an external service provider but did not disclose the service provider's identification and information such as full name, address, business registration number, relationship with taxpayer, etc. to the Inland Revenue Department.

It purchased an unused industrial building including land from a property developer for $10,000,000 for use in its qualifying trade and business for the whole year. The cost of development to the property developer was $8,000,000, comprising cost of land $5,000,000 and cost of construction $3,000,000. No depreciation allowance, if allowable, has been claimed in this regard.

Required:

How much in total could TT Ltd. claim as deductible expense and/or deductible allowance in respect of the expenditures above for the year of assessment 2015/16?

Support your answer with computation in an itemized format.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Libby, Short

6th Edition

978-0073526881

Students also viewed these Accounting questions