Business Tax FA2016 Assessment question
LouboutinLou1
Registered Posts: 27 Regular contributor ⭐ ? ⭐
Hi,
This question is from the AAT practice exam 2016  Task 3
I managed to work out the salaries for Poppy, Paul & Pino but can't seem to be able to get the profit shares correct.
Can anyone help please?
Thanks
This question is from the AAT practice exam 2016  Task 3
I managed to work out the salaries for Poppy, Paul & Pino but can't seem to be able to get the profit shares correct.
Can anyone help please?
Thanks
0
Comments

Business Tax FA2016 Assessment question0

Hi,
From 1st April
Salary for Poopy > 5360
Salary for Paul > 3750
Total salaries paid = 9110
Profit year ended 31 March > 68600 / 12 = 5717 profit per month
Profit for the first period > 5717 x 3 = 17150
You then need to deduct the salaries already paid from the profit to share in the first period
171519110=8041
Then share the profit left as indicated:
Poopy 8041x40%= 3216
Paul 8041x60%= 4824
Same for the second period.
Total salaries paid > 43890
Profit for the second period > 68600/12x9 = 51445
Profit left for sharing > 51445  43890 = 7560
Poopy 7560 x 20% = 1512
Paul 7560 x 40% = 3024
Pino 7560 x 40% = 3024
If you add up all the salaries & profit paid it should give you the total profit for the year
5360 + 3750 + 3216 + 4824 + 43890 + 1512 + 3024 + 3024 = 686000 
Many thanks Reme, makes perfect sense
I seem to be struggling with BTax FA2015 also (Task 3)
I have the tax years and basis periods correct but the profit incorrect. Can't find where I'm going wrong with this one??0 
@LouboutinLou1LouboutinLou1 said:Many thanks Reme, makes perfect sense
I seem to be struggling with BTax FA2015 also (Task 3)
I have the tax years and basis periods correct but the profit incorrect. Can't find where I'm going wrong with this one??
You need to apportion each profit given accordingly to each period.
P/e 30 June 2014 > 50750
P/e 30 June 2015 > 106800
P/e 30 June 2016 > 77400
First year > 50750/7X4 = 29000
7 > these are the months which the first profit belongs to (1 Dec  30 June)
4 > since the first year is only until March 2014, only 4 months will be considered.
Second year > 50750 + (106800/12X5) = 95250
Third year > 106800
In the second year is where the profit is being overlapped > 29000 from 1 Dec to 6 April which were already taken into consideration in the 1st year.0 
Many thanks Reme0
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