QUESTION 1Hitachi Sdn Bhd (Hitachi) owns 100 acres of plantation land. On 1 June 2010, Hitachigranted a 40-year lease over 12 acres of land to Toshiba Sdn Bhd (Toshiba), for apremium of RM240,000 and an annual rent of RM12,000.Toshiba completed the construction of a factory on the leased land on 15 December2010 at a cost of RM1,000,000. It immediately used the factory and all of the land inits manufacturing business.On 1 June 2018, Toshiba transferred the lease over five acres and the factory buildingsitting on the said land to Zoya Sdn Bhd (Zoya), for a premium of RM1,800,000(RM1,200,000 for the factory building and RM600,000 for the land) and an annualrent of RM8,000. This sub-lease to Zoya is for the residual duration of the main leaseto Toshiba.Toshiba retained the balance of seven acres of the land for its own use in an orchardbusiness commencing 1 June 2018.The three companies are all unrelated and make up their accounts to 31 Decemberannually.Required: (a) Compute the real property gains tax (RPGT) liability of Toshiba Sdn Bhd on thedisposal of the lease on 1 June 2018 over the five acres of land and factory building.(b) Explain the RPGT compliance requirements for Zoya Sdn Bhd as the acquirer of achargeable asset.(c) Explain the income tax treatment of the rental expense and rental income of ToshibaSdn Bhd (1) before the granting of the sub-lease; and (2) after the granting of the sub-lease to Zoya Sdn Bhd.(d) Discuss the tax treatment of premium value and annual rent received by Hitachi SdnBhd.

Hitachi Sdn Bhd (Hitachi) owns 100 acres of plantation land. On 1 June 2010, Hitachi granted a 40-year lease over 12 acres of land to Toshiba Sdn Bhd (Toshiba), for a premium of RM240,000 and an annual rent of RM12,000. Toshiba completed the construction of a factory on the leased land on 15 December 2010 at a cost of RM1,000,000. It immediately used the factory and all of the land in its manufacturing business.

Hitachi Sdn Bhd (Hitachi) owns 100 acres of plantation land. On 1 June 2010, Hitachi granted a 40-year lease over 12 acres of land to Toshiba Sdn Bhd (Toshiba), for a premium of RM240,000 and an annual rent of RM12,000. Toshiba completed the construction of a factory on the leased land on 15 December 2010 at a cost of RM1,000,000. It immediately used the factory and all of the land in its manufacturing business.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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