Part AFull Tax Co. is incorporated and tax resident in Barbados. The audited financial statements forFull TaxCo. for year-end December 31, 2022, show an accounting profit after tax of $5,500,000 aftercharging thefollowing:Depreciation $1,500,000Tax for the year $500,000Property Tax $1,000,000• Interest expense $15,000• Preference dividends of $40,000Legal fees $1,110,000• Insurance of $750,000• Bad debts $40,000• Foreign Travel $20,000• Repairs and Maintenance $1,500,000. General expenses $600,000Other Information1.Property Tax of $600,000 was paid for the property on which the company's factory islocated; $300,000 for the office premises and $100,000 for the director's home.2. The insurance was paid for the factory and office premises.3. The bad debt expense includes a general provision of $10,000 and a specific provision of$30,000.4. The company paid interim ordinarily dividends totaling $100,000.5 Repairs and Maintenance include for $500,000 removing the office ceramic floor titlesand replacing it with wooden flooring.6. Included in the company's total assessable income is exempt income of $50,000.$16,500 relates to expenses incurred in earning this exempt income.7. Legal fees include:- $40,0000 in respect of recovery of commercial debts for Full Tax Co.- $10,000 in respect of recovery of commercial debts for Half Tax Co. The company wasreimbursed this amount. - $15,000 in respect of recovery of commercial debts for One-Third Tax Co. Thecompany was not reimbursed this amount.- $50,000 relating to the purchase of new subsidiary-$400,000 to increase the share capital of the company8. General expenses include $72,000 for the school fees of the director's son.9. The capital allowances have been calculated at $130,550. Based on the items includedin the fixed asset schedule.10. There was an increase in wages of $1,000,000 which qualifies for Employment TaxCredit (all other conditions to qualify for this credit was met).11. The tax rates for general Barbados as follows:Corporate income tax (CIT) ratesThe following rates apply to taxes on corporate incomeTaxable income bracket/EnsityTaxable income up to 1 million Barbados dollars (880)Taxable income exceeding 880 1 milion but not exceeding 860 20 minTaxable income exceeding 880 20 million but not exceeding 880 30 minTaxable income exceeding 880 30 million2013-$300,0002015-$5,000,0002020-$4,000,000CIT()6.5Required302512. Assume capital allowance rate of 5 % p. A for building/ leasehold improvements.13. All amounts are in Barbadian currency.14. As at the 31 December 2020, the company has prior year's tax losses as follows:10Tax losses can be carried forward for a maximum of 7 years and is restricted to 50% ofthe tax income in the current year.it.iii. Calculate the Corporation Tax Payable for Full Tax Co. for Y/A: 2022. Using theBarbados Income Tax Act or any other relevant document explain the treatment of theitems included or omitted from the income tax computation.

Calculation of Corporation Tax Payable for Full Tax Co. for Y/A 2022: Accounting profit after tax =…

Part A Full Tax Co. is incorporated and tax resident in Barbados. The audited financial statements for Full Tax Co. for year-end December 31, 2022, show an accounting profit after tax of $5,500,000 after charging the following: Depreciation $1,500,000 Tax for the year $500,000 Property Tax $1,000,000 Interest expense $15,000 • Preference dividends of $40,000 •Legal fees $1,110,000 • Insurance of $750,000 •Bad debts $40,000 • Foreign Travel $20,000 • Repairs and Maintenance $1,500,000 • General expenses $600,000 Other Information 1. Property Tax of $600,000 was paid for the property on which the company's factory is located; $300,000 for the office premises and $100,000 for the director's home. 2. The insurance was paid for the factory and office premises. 3- The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000. 4. The company paid interim ordinarily dividends totaling $100,000. & Repairs and Maintenance include for $500,000 removing the office ceramic floor titles and replacing it with wooden flooring. 6. 7. Included in the company's total assessable income is exempt income of $50,000. $16,500 relates to expenses incurred in earning this exempt income. Legal fees include: -$40,0000 in respect of recovery of commercial debts for Full Tax Co. -$10,000 in respect of recovery of commercial debts for Half Tax Co. The company was reimbursed this amount.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q