Wintowsky Sdn Bhd (WSB) is a resident company with a paid-up share capital of RM2

million. It is registered for goods and services tax (SST) and closes its accounts annually on

31 December.

WSBs income statement for its financial year ended 31 December 2020 is as follows:

Note RM'000 RM'000

Revenue 722,000

Less: Cost of sales 1 (610,000)

Gross profit 112,000

Add: Other income 2 1,515

113,515

Less: Expenses

Salary and welfare expenses 3 109,243

Property expenses 4 17 (109,288)

Selling and marketing expenses 5 28

Profit before tax 4,227

Notes:

(1) Cost of sales includes: RM000

Insurance for imports, paid to Malaysian companies 131

Export promotional expenses 60 *DD

Depreciation 1,400 *NA

Allowance for inventory obsolescence 500 *NA

The allowance for inventory obsolescence is calculated as follows: RM000

Opening balance 40

Add: Allowance for year 500

Less: Inventory written off (270)

Closing balance 270

*500-270=230

(2) Other income RM000

Rental income (note(i)) 600

Gain on disposal of an investment building 900

Interest income from deposits placed in banks 15

1,515

Note (i): The rental income relates to a building in Malaysia. WSB provides comprehensive and active maintenance and support services. *another business income

3) Salaries and welfare expenses include: RM000

Contribution to the approved Save the Green program 4

Compensation to an ex-employee for loss of employment. The

Employee worked for the company for six and a half years. 92

Remuneration for a disabled staff member 12

Embezzlement by director:

The accounts executive was responsible for collecting the

money from staff on the first Monday of the month. Due to ill

health, a director collected and absconded with the money.

A police report was filed. 22

(4) WSB incurred the following property expenses relating to the rented

Investment property:

i) Assessment and other maintenance expenses (fully deductable) 5

ii) Legal fees on the termination of the tenancy agreement prior to use 2

iii) Legal fees for the sales & purchase on the sales of the property 10

(5) The marketing expenses relate to the entertainment of a subsidiarys employees 28 *100%allow

Additional information: RM000

i) WSB has brought forward tax-adjusted losses from earlier years 668

ii) Capital allowances for the current year amounts to 1,007

iii) Balancing charge arising out of a disposal in the current year 34

Required:

Commencing with the profit before tax, compute the chargeable income and corporation tax

payable of Wintowsky Sdn Bhd for the year of assessment 2020.

Note: You should indicate by the use of the word nil any item referred to in the question

for which no adjusting entry needs to be made in the tax computation. (26 marks)