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Sh. "000" Sh. "000" Gross profit Less: Expenses 48,000 General expenses 3,900 Directors fees 7,200 Depreciation 10,400 Salaries and wages 4,600 Donations to 820 political party Interest expense 6,200 Dividends paid 4,605 Repairs and 6,250 43,975 maintenance Net profit for the year 4,025 Additional information 1. On 1 January 2021, ABC Ltd purchased its factory from Msambweni Ltd, a registered contractor for sh. 500 million. Msambweni Ltd. Availed the following details concerning the cost of construction of the factory. Sh. "000" Acquisition of land 25,000 Demolition of old building on site 19,000 Labour quarters built on site 60,000 Factory building 190,000 Stone perimeter wall around the factory 30,000 Bank interest paid during period of construction 56,000 Total 380,000 2. The factory housed a warehouse costing sh. 17,000,000, office costing sh. 50,000,000 and showroom costing sh. 25,000,000. ABC Ltd installed processing machinery costing sh. 200,000,000 on 2 January 2021 and started manufacturing animal feed. 3. The following additional assets were acquired during the year ended 31 December 2021. Date Asset Cost sh. 5 Jan New photocopiers 620 12 Jan Furniture 820 15 March Computers 2,250 13 April Motor cycle 190 14 June Wheelbarrows 36 18 July Television set 48 21 July 3 saloon cars (sh. 2.6 million each) 7,800 26 October 2 lorries (4 tonnes each) 8,000 4. The following assets were disposed of during the year: Date Asset 1 October 2021 Saloon car (purchased by msa 6 November 2021 Furniture The written down values brought forward for capital allowance purposes as at 1 January 2021 were as follows; Class I Class II Class III Class IV Sh. "000" Sh. "000" Sh. "000" Sh. "000" 7,790 4,615 8,777 2,990 Required; Compute for ABC Ltd for the year ended 31 December 2021; i. Capital allowances. ii. Adjusted Taxable profit iii. Tax liability if any.​

Respuesta :

To compute for ABC Ltd for the year ended 31 December 2021:

i. **Capital Allowances**:
- Determine the cost of each asset acquired during the year.
- Apply the appropriate depreciation rates for each class of asset to calculate the annual depreciation.
- Sum up the annual depreciation for each class to get the total capital allowances.

ii. **Adjusted Taxable Profit**:
- Start with the net profit for the year as per the income statement.
- Add back non-deductible expenses such as donations and interest expense.
- Subtract the total capital allowances calculated in part (i).
- Adjust for any gains or losses on disposal of assets.
- Consider any other adjustments required by tax regulations.

iii. **Tax Liability** (if any):
- Apply the corporate tax rate to the adjusted taxable profit to determine the tax liability.
- Take into account any tax credits or incentives applicable.

For the detailed calculations, I would need the depreciation rates for each class of asset, any specific tax regulations applicable, and the corporate tax rate in your jurisdiction.

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