TAXATION question please mention the workings clearly for a) and b) Question 1:Mark is employed by ABC Ltd, a small family company, in which he holds 20,000 £1 ordinaryshares; the remaining 80% are held by the other senior employees.The company accounts show the following information:Year to 30 November20192020Salary to Mark (paid at the end of each month)Bonus to Mark (paid in the following February)28,5004,20033,0002,700The following information is provided in respect of 2019/20.(1) The senior employees have been able to use the company yacht moored on the south coastfor two weeks each year since its purchase. Mark spent his fortnight on the boat along with hisfamily.The yacht cost the company £42,000 in 2014 (current value £33,000) and running andmaintenance expenses amounted to £6,000 during the year.(2) Mark belongs to a private medical scheme and the company paid the required premium of£270 (including £50 for his family),(3) Mark took meals in the fully subsidised executive canteen; the cost for the year being £735.Another fully subsidised canteen was available for the other staff.(4) When at the company premises Mark has use of a 3,500 cc Range Rover car owned by thecompany which emits 268 g/km of CO2. It had a list price of £62,000 when new in 2014 and costs£4,800 a year to run. It is garaged at the company's head office and is also used by all thedirectors for business purposes.Mark is also provided with a three-year-old 2 litre Mini (list price £16,500) with C02 emissions of149 g/km. Mark is provided with private fuel. Both cars run on petrol, and the list price includesdelivery and number plates.(5) He pays 3% of his basic salary into the company's occupational pension scheme. Thecompany contributes an amount equal to 7% of his salary.(6) Mark is provided with a 2% interest rate loan from his employer of £20,000 which was grantedthree years ago to assist with the purchase of his daughter's residence. He has no other loansand has paid interest only on a monthly basis.(7) The company also loaned Mark one of its personal computers, with a printer, for use at homeso that he could improve his IT skills. The equipment had cost the company £2,800 (including£350 for the printer) in June 2017. The market value of the equipment when it was first providedto Mark on the 6 April 2019 was £2,010.(8) From 6 June 2019 he lived in Southampton in a house owned by the company which cost£80,000 in 1995. Its market value on 6 June 2019 was £138,000. The annual value for the periodfrom 6 June 2019 to 5 April 2020 can be taken as £900. The company paid the following expenses in connection with the house during his period ofresidence in 2019/20.£Council taxElectricityTelephoneCleaning550260110130The furniture in the house is estimated to have cost £7,200.(9) Mark received a dividend of 40p per share in May 2019.Required:a) Compute Mark's income tax liability for 2019/20.Assume the official rate of interest for2019/20 is 2.5%.b) Recalculate Mark income tax liability for 2019/20 assuming that he paid £4,000 to thecharity under Gift Aid Donation Scheme.

Solution: Income tax computation - 2019/20 Non-savings Dividends TotalEarned income Employment…

Answered: Question 1: Mark is employed by ABC…

Question 1: Mark is employed by ABC Ltd, a small family company, in which he holds 20,000 £1 ordinary shares; the remaining 80% are held by the other senior employees.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: how does one calucluate revenues from the question (see image attached ) answer is C

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: When does tax allocation within a period become necessary?How should this allocation be handled?

Q: Distinguish between Direct and Indirect taxes giving the various examples where necessary.

A: Taxes are the compulsory obligations to be paid by the individuals to government. It can be levied…

Q: Explain double taxation, its elements, and its types

A: Governments in practically every country throughout the world levy forced charges on persons or…

Q: report expenses using correct tax categories because

A: The accountants have to report expenses under correct categories always.

Q: An example of an expense classifi cation by function is: A . tax expense.

A: Expenses in the Income Statement are classified into two types: Expense by nature Expense by…

Q: (b) Andrew died on 30 November 2019 leaving an estate comprising of his main residence valued at…

A: Tax is a mandatory monetary charge or some other levy on a citizen or organization by an…

Q: What is the authoritative literature addressing revenue recognition when right of return exists?

A: Financial accounting standards board (FASB): This is the organization which creates, develops, and…

Q: Taxation question ( please show all the workings ). PART- A PART- B Question is attached as…

A: Tax is a charge or levy which is fixed by the state and central government of the county on the…

Q: a. The purpose meaning, it may be used to make up for the benefit receiv . Taxes may be imposed for…

A: Tax refers to the financial or necessary obligation which is imposed on the people of country or…

Q: When should revenue be recognised? Are there exceptions to the general rule?

A: Definition: The revenue recognition principle: The revenue recognition principle refers to the…

Q: what are the two components of income tax expense

A: PLEASE LIKE THE ANSWER Firstly, income tax expense means an amount of tax expense incurred on the…

Q: What is agency promblem in financial terms?

A: Agency problem is the conflict arises in the interest inherent in any relationship, in which one…

Q: Select all that apply Which of the following apply to taxation? (Check all that apply.) Tax planning…

A: Every person, firm, and company has a responsibility to pay taxes to the government on their income…

Q: What is the purpose of valuation in terms of taxation?

A: Introduction : In simple words, valuation refers to the process in which the intrinsic value of a…

Q: What is meant by “tax allocation within a period”? What is the justification for such practice?

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: hat are the limitations to the power of taxation? Discuss each briefly. (Please include the…

A: Power of taxation is given to the central and state controlling bodies of the countries wherein tax…

Q: What qualitative and quantitative disclosures arerequired related to revenue recognition?

A: Revenue recognition is a generally accepted accounting principle (GAAP) that identifies the specific…

Q: Revenue of the government is composed of tax and other source of income. * A. True B. False

Q: Mr. C living in Berlin, leased out his flat as residency premises in İzmir and obtained 8.000 € as…

A: INCOME Rental Income from Residency Premises in Izmir (Turkey): 8,000 Euro Rental Income from…

Q: Describe the steps to apply Core Revenue Recognition Principle.

A: Revenue recognition principle: Revenue recognition principle refers to the revenue that should be…

Q: what is Tax Rights and Responsibilities?

A: Tax is the amount which is paid out from the taxable income of the taxpayer. There are various…

Q: Billy is a 16-year old dependent on his parents' tax return. Billy has the following income. He has…

A: Introduction The taxable income of a child is calculated by bifurcating his earned income and…

Q: Accounting Equation Inspirational Inc. is a motivational consulting business. At the end of its…

A: Stockholder's equity refers the equity or capital introduced by the owner and it also includes…

Q: Discuss the fundamental concepts related to revenue recognition and measurement.

A: Revenue Recognition: Revenue recognition is a Generally accepted accounting principle that tells…

Q: How does Dropbox apply GAAP to revenue recognition? Explain and give examples.

A: Generally Accepted Accounting(GAAP) GAAP are a set of rules the encompass the details, complexities…

Q: Discuss, using practical example how revenue expenditure should not be capitalized?

A: SOLUTION- Thus, a revenue expenditure which increases the utility or productive capacity of an…

Q: May an exaction be both a tax and regulatory fee

A: First of all we need to understand that Tax and Regulatory fees both are independent and can not…

Q: Identify additional issues in accounting for income taxes.

Q: Explain tax compliance with Heuristics, biases and framing effects

A: Tax compliance refers to the extent to which taxpayers comply with tax laws and regulations. Tax…

Q: Describe the Fundamental Issues Related to Recognizing Revenue.

A: Revenue Recognition: Revenue recognition refers to the principle which tells about the conditions…

Q: Briefly discuss double taxation

A: Taxes are the amount of obligations that needs to be paid by the individual to the government. Taxes…

Q: Distinguish between “juridical double taxation” and “economic double taxation”.

A: Juridical double taxation refers to a situation where the same taxpayer is subject to taxation on…

Q: What are the best steps in a taxation law assignment to step through residency and source, and also…

A: To determine the tax income of an individual is o the basis of whether the individual in the status…

Q: Melbourne Awesome Ltd supplies a wide range of folding bicycles. Melbourne Awesome Ltd derives…

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: What factors need to be considered in determining whether a receipt is of an income or of a capital…

A: The essential distinction between Capital Receipt and Income is the "purpose" with which the asset…

Question

TAXATION question

please mention the workings clearly for a) and b)

Question 1:
Mark is employed by ABC Ltd, a small family company, in which he holds 20,000 £1 ordinary
shares; the remaining 80% are held by the other senior employees.
The company accounts show the following information:
Year to 30 November
2019
2020
Salary to Mark (paid at the end of each month)
Bonus to Mark (paid in the following February)
28,500
4,200
33,000
2,700
The following information is provided in respect of 2019/20.
(1) The senior employees have been able to use the company yacht moored on the south coast
for two weeks each year since its purchase. Mark spent his fortnight on the boat along with his
family.
The yacht cost the company £42,000 in 2014 (current value £33,000) and running and
maintenance expenses amounted to £6,000 during the year.
(2) Mark belongs to a private medical scheme and the company paid the required premium of
£270 (including £50 for his family),
(3) Mark took meals in the fully subsidised executive canteen; the cost for the year being £735.
Another fully subsidised canteen was available for the other staff.
(4) When at the company premises Mark has use of a 3,500 cc Range Rover car owned by the
company which emits 268 g/km of CO2. It had a list price of £62,000 when new in 2014 and costs
£4,800 a year to run. It is garaged at the company's head office and is also used by all the
directors for business purposes.
Mark is also provided with a three-year-old 2 litre Mini (list price £16,500) with C02 emissions of
149 g/km. Mark is provided with private fuel. Both cars run on petrol, and the list price includes
delivery and number plates.
(5) He pays 3% of his basic salary into the company's occupational pension scheme. The
company contributes an amount equal to 7% of his salary.
(6) Mark is provided with a 2% interest rate loan from his employer of £20,000 which was granted
three years ago to assist with the purchase of his daughter's residence. He has no other loans
and has paid interest only on a monthly basis.
(7) The company also loaned Mark one of its personal computers, with a printer, for use at home
so that he could improve his IT skills. The equipment had cost the company £2,800 (including
£350 for the printer) in June 2017. The market value of the equipment when it was first provided
to Mark on the 6 April 2019 was £2,010.
(8) From 6 June 2019 he lived in Southampton in a house owned by the company which cost
£80,000 in 1995. Its market value on 6 June 2019 was £138,000. The annual value for the period
from 6 June 2019 to 5 April 2020 can be taken as £900.

The company paid the following expenses in connection with the house during his period of
residence in 2019/20.
£
Council tax
Electricity
Telephone
Cleaning
550
260
110
130
The furniture in the house is estimated to have cost £7,200.
(9) Mark received a dividend of 40p per share in May 2019.
Required:
a) Compute Mark's income tax liability for 2019/20.Assume the official rate of interest for
2019/20 is 2.5%.
b) Recalculate Mark income tax liability for 2019/20 assuming that he paid £4,000 to the
charity under Gift Aid Donation Scheme.

Rules by which an authority (usually a government) imposes a financial obligation on individuals or organizations within its domain. Property or transactions can be taxed. While taxes are primarily intended to fund the operation of a government, many tax laws are created to encourage or discourage certain behaviors by citizens or companies.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.