FMEL is a manufacturing company incorporated in accordance with the Mauritian Law. The company principal activity is to provide high quality of T-Shirt for the American and European market. For the year ended 31 Dec 2021, the draft income statement shows the following details: NOTES MUR MUR Turnover 1 32,000,000 Less: Cost of Sales
FMEL is a manufacturing company incorporated in accordance with the Mauritian Law. The
company principal activity is to provide high quality of T-Shirt for the American and
European market.
For the year ended 31 Dec 2021, the draft income statement shows the following details:
NOTES MUR MUR
Turnover 1 32,000,000
Less: Cost of Sales
Opening stock 2 1,000,000
Purchase 3 24,000,000
Add inward carriage 4 2,500,000
Closing stock 6 (1,500,000)
Total cost of sales (27,000,000)
Gross Loss 5,000,000
Other income
Dividend 7 235,500
Interest 8 50,000
EXPENSES
Wages and salaries 9 975,000
Rent 10 300,000
Repairs 11 50,000
Travelling expenses 12 125,000
Legal and Professional Expenses 13 75,000
Depreciation 14 70,000
Interest 15 7,000
Light and Heat 16 50,000
Sundry Business Expenses 17 22,500
Motor Vehicle Expenses 18 47,500
Advertising Expenses 19 50,000 (1,772,000)
Net profit before
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NOTES
1. Turnover has not taken into consideration the return of goods sold amounting MUR
1,000,000.
2. Opening stock include goods destroy by the negligence of the worker amounting to
MUR 350,000.
3. Purchases represent the cost of buying raw material. The payment for raw material is
made in USD and hence that has given rise to an unrealized loss of MUR 25,000
included the purchase price.
4. Inward carriage represents the cost paid to bring the raw material to the company.
5. The company has a straight-line depreciation policy and this is the fifth year of
depreciation out of an expected life of 10 years.
6. Closing stock include good sold but not yet deliver as at the closing of the year end
and amount to MUR 175,000.
7. Dividend was received on the share hold by the company in SBM, SIT and other
domestic company
8. Interest received was from the investment in Treasury bill issue by the Bank of
Mauritius.
9. Wages and salaries do not include the bonus payable of MUR 2,500 on the
performance of the manager.
10. The Company’s rent of MUR 300,000 includes a TDS of MUR 15,000.
11. Repairs and maintenance are cost of minor maintenance cost in the factory.
12. Travelling expenses relates to taxi fare for those working overtime.
13. Legal and professional expenses relate to auditing fee provision made by the
company.
14. Depreciation of MUR 70,000 is for motor vehicles, costing MUR 500,000 in 2018.
15. Interest expenses relates to the company credit card used by the CEO during official
trips.
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16. MUR 50,000 cost for light and Heat includes the expense for CEO house amounting
to MUR 2,000
17. Included in sundry business expenses are MUR 1,000 dinners for the CEO
daughter’s birthday
18. During the year, the company paid the CEO MUR 4,500 for the use of his car for
work purposes.
19. Advertising expenses relate to the promotion of the company’s activities.
20. Last year the company had a chargeable income of MUR 2,500,000.
REQUIRED
From the above information compute the amount of tax payable under the Income Tax
Act 199
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