ABC Limited Corporation Tax Liability Computation Profit per accounts Year of Assessment 2013 Add: 5,2000,00 Depreciation Legal fees 650,000 600,000 Donation 44,000 Bad debts 312,000 Foreign travel 180,000 1,786,000 6,986,000 Less: Refund to tax Less Capital Allowances Adjusted profit Corporate tax liability @ 25% (150,000) 6,836,000 (1,600,000) 5,236,000 1,309,000
The audited accounts of Lindsay Co. for year-end August 31, 2014 show a profit of
$3,115,000 after charging the following:
Depreciation 430,000
Rent 175,000
Legal fees 1,350,000
Audit fees 88,000
Donations 119,000
Bad debts 242,000
Foreign Travel 395,750
Interest payments 62,375
Other Information:
a. Legal fees are as follows:
Expenses in respect of recovery of debts, $585,000
Expenses related to the increase private share capital, $765,000
b. Lindsay Co. donated $65,500 to UTECH University and $53,500 to HELP, a
private charity registered under the Charities Act.
c. Bad debts are as follows:
• A loan of $76,130 to Derek Stan who failed to repayit.
• $63,017, owed by Simplicity Ltd. which was declared bankrupt.
• The balance is a percentage of receivables at year end which is deemed to be
bad.
d. Foreign travel expense included $268,210 for a vacation package for the
marketing manager’s and his family plane tickets. The remaining amount was for
a business trip to meet with potential suppliers.
e. Included in revenue is the item – Refunds from Income Tax of $88,900
f. The capital allowances have been calculated at $1,260,500
Calculate the Corporation Tax Liability of Lindsay Co. for Year of Assessment: 2014 , Put in similar table like the one attached.
Present notes where applicable.
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