BTC preparing for June 2010 exam

MichaelBeechFMAAT
MichaelBeechFMAAT FMAAT, AAT Licensed Accountant Posts: 16 Regular contributor ⭐ ? ⭐
Any ideas on this question. Sort of like something which may come up in the exam

Accounts of Windowledge Co Ltd year ending 31.3.2010 are here. Capital allowances have been figured out amounting to £150k

In (£000)

Revenue 800
COS (400)
Gross Profit 400
Other Income 300
Finance costs (75)
General and admin exp (200)
Forwarding and distribution exp (100)
Profit before tax 325
Tax (78)
Profit for year 247

Finance costs is for the bank overdraft interest

Admin and general exp incl Entertaining customers 10,000; Loan to worker wrote off 5,000; Increase in general bad debt provision 10,000

Other income has: Income from rented property 210k, Disc received from trading 15K, Profit on sale of Fixtures 30k, Dividends rec'd 20k, Investment interest inc 25k

here's the task: (i) Calc the trading inc assessable figure as adj for tax purposes and if there is any trading loss
(ii) If there is a trading loss state how it could be offset, but not by carrying forward to periods in the future...

Any ideas?
Michael Beech FMAAT CIMA Dip MA
Co -Director AM-Accounting & Business Advisors Ltd
Director, MSBeech Enterprises Ltd t/a Michael Beech Accountancy

Comments

  • gosia79
    gosia79 Registered Posts: 25 Dedicated contributor ? ? ?
    the trading loss is £85,000

    Profit before tax: £325,000
    less:
    entertaining customers £10,000
    loan written off £5,000
    increase in general provision of bd
  • MichaelBeechFMAAT
    MichaelBeechFMAAT FMAAT, AAT Licensed Accountant Posts: 16 Regular contributor ⭐ ? ⭐
    gosia79 wrote: »
    the trading loss is £85,000

    Profit before tax: £325,000
    less:
    entertaining customers £10,000
    loan written off £5,000
    increase in general provision of bd

    Cool, me too:
    £000
    Profit before tax 325
    Plus Entertaining customers 10
    Plus loan to worker 5
    Plus Inc in general bd provision 10
    350
    less:
    Rental Income (210)
    Profit on fixtures (30)
    Dividends rec'd (20)
    Investment interest (25)
    65
    less Capital Allowances (150)

    Loss (85)

    In order not to set against future profits, I think there are two options

    If you have enough= set off against other incomes during the period within the same CAP

    If not set off against other incomes during the period within the same CAP and set the remainder against the prior period total PCTCT ......am I right?
    Michael Beech FMAAT CIMA Dip MA
    Co -Director AM-Accounting & Business Advisors Ltd
    Director, MSBeech Enterprises Ltd t/a Michael Beech Accountancy
  • gosia79
    gosia79 Registered Posts: 25 Dedicated contributor ? ? ?
    Apologies, posted it too quickly first time.


    i) The trading loss is £85,000

    Profit before tax: £325,000
    Plus:
    entertaining customers £10,000
    loan written off £5,000
    increase in general provision of bd £10,000
    Less:
    other income except for discounts (£285,000)
    capital allowances (£150,000)
    Trading loss: (£85,000)

    (ii)It could be offset against the current PCTCT. In this case the loss will reduce PCTCT from £285,000 (Other income) to 200,000.


    If there is any loss left (not this case), it can be set against the PCTCT of the previous 12 months, then up to £50,000 of loss can be set against the PCTCT of the preceding two years

    I am still revising and not felling vey confident before the exam yet...
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