with more sophisticated machineries. Hence some of the old machines will be disposed including a stamping machine which was bought on 1st June 2019. These old machines must be disposed in this financial year or latest, by next financial year (i.e year ending 31 March 2021). The accountant is of the view some of the machines w
Palmca Sdn bhd (Palmca) is a loss-making company with a paid-up capital of RM2.3 million. It has a current year loss of RM600,000 in YA2020. Palmca is expected to continue incur huge losses next financial year. Recently, Pamlca has conducted a brainstorming session amongst its top management to come up with a new five-year business plan for the company to start making profit after several years of losses. One of the recommendations is to replace old machineries with more sophisticated machineries. Hence some of the old machines will be disposed including a stamping machine which was bought on 1st June 2019. These old machines must be disposed in this financial year or latest, by next financial year (i.e year ending 31 March 2021). The accountant is of the view some of the machines will have to be sold at a loss.
a) Advise Palmca on the disposal of its machineries in term of timing (assuming all machines will be disposed to external parties except for the stamping machine). Note: you must state the month of disposal, i.e be specific in your answer.
b) Advise Palmca on how to save tax on the disposal of the stamping machine.
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