Alliance Company Ltd has a profit before tax of $12 000 000 at the end of 31 December 2013, after charging /crediting the following: $ Depreciation 240 000 Interest expense 1 000 000 Legal fees 700 000 Audit fees 500 000 Foreign travel 300 000 Bad debts 700 000 Donations 400 000 Interest income (120 000) Additional information: a. Legal fees are as follows: - expenses related to an increase in share capital, $300 000 - expenses related to the recovery of bad debt $250 000. b. Included in revenue is franked income (net) of $5 000. c. Bad debts are advances totaling $200 000 to a salesman who had left Alliance Co. Ltd; Bilboa Ltd. a debtor of $100 000 and $400 000 is a percentage of trade debts outstanding at the end of 2013. d. Interest payable at 31 December 2012 was $350 000 and at the end of the current year, it was $200 000. e. Profit on disposal of non-current assets during the year was $50 000 and is included income. f. Capital allowances are as follows: Initial allowance $90 000 Balancing charge $60 000 g. Included in foreign travel is $130 000 for the managing director’s family. h. Alliance paid estimated tax of $700 000 during 2013 and tax deducted at source from interest income during the year was $200 000. Required: Prepare Alliance Company Ltd Tax Liability for the year of assessment 2008 with necessary notes.
Alliance Company Ltd has a profit before tax of $12 000 000 at the end of 31 December 2013, after charging /crediting the following:
$
Interest expense 1 000 000
Legal fees 700 000
Audit fees 500 000
Foreign travel 300 000
Donations 400 000
Interest income (120 000)
Additional information:
a. Legal fees are as follows:
- expenses related to an increase in share capital, $300 000
- expenses related to the recovery of bad debt $250 000.
b. Included in revenue is franked income (net) of $5 000.
c. Bad debts are advances totaling $200 000 to a salesman who had left Alliance Co. Ltd; Bilboa Ltd. a debtor of $100 000 and $400 000 is a percentage of trade debts outstanding at the end of 2013.
d. Interest payable at 31 December 2012 was $350 000 and at the end of the current year, it was $200 000.
e. Profit on disposal of non-current assets during the year was $50 000 and is included income.
f. Capital allowances are as follows:
Initial allowance $90 000
Balancing charge $60 000
g. Included in foreign travel is $130 000 for the managing director’s family.
h. Alliance paid estimated tax of $700 000 during 2013 and tax deducted at source from interest income during the year was $200 000.
Required:
Prepare Alliance Company Ltd Tax Liability for the year of assessment 2008 with necessary notes.
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