Can you help me calculate the Capital gains tax assuming a capital gains tax is 20%? Part 1PTI Inc., located in a country which has a capital gains tax, conducted the followingtransactions:a. Purchased a building in February 2018 for $26,000,000. In March 2019, thecompany spent $2,800,000 to install solar panels for electricity in the building. Thebuilding was sold for $40,000,000 in 2021. The annual maintenance cost was$500,000. The cost of advertising the sale of the building and the legal feesamounted to $1,200,000.b. A motor vehicle was purchased for $5 million on January 1, 2018. The vehicle wassold in 2021 for $4.5 million.c. Bought an antique painting for $3.5 million in 2019. The painting was sold in 2021for 1 million.d. Purchased a government bond for $5,000,000.The company is entitled to Annual Exemption of $500,000. Capital losses as at 1 January2021 was $7,500,000.Calculate the capital gains tax in 2021, assuming a capital gains tax of 20%.

Capital loss on Jan. 1 ($7,500,000) Add: Capital losses 2021 (4,500,000-5,000,000) ($500,000)…

Answered: Part 1 PTI Inc., located in a country…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Can you help me calculate the Capital gains tax assuming a capital gains tax is 20%?

Part 1
PTI Inc., located in a country which has a capital gains tax, conducted the following
transactions:
a. Purchased a building in February 2018 for $26,000,000. In March 2019, the
company spent $2,800,000 to install solar panels for electricity in the building. The
building was sold for $40,000,000 in 2021. The annual maintenance cost was
$500,000. The cost of advertising the sale of the building and the legal fees
amounted to $1,200,000.
b. A motor vehicle was purchased for $5 million on January 1, 2018. The vehicle was
sold in 2021 for $4.5 million.
c. Bought an antique painting for $3.5 million in 2019. The painting was sold in 2021
for 1 million.
d. Purchased a government bond for $5,000,000.
The company is entitled to Annual Exemption of $500,000. Capital losses as at 1 January
2021 was $7,500,000.
Calculate the capital gains tax in 2021, assuming a capital gains tax of 20%.

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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