Additional exercises

Partnership

Daud and Joe are partners. The business accounting year ends on
31 December annually. A new partner, Mel joined the partnership
on 1 September 2023. The information pertaining to partnership as
follows:

Daud Joe Mel

Salary per year 54,000 66,000 48,000
Interest on capital per annum 5,000 7,500 6,000
Private expenses 2,200 1,800 NIL
Profit sharing ratio:
Jan – August 2023 1/2 1/2 -
September - December 2/5 2/5 1/5

Additional information:

1. Daud owns a terrace house in Gopeng, Perak. The house was

first rented out to Laila on 1 March 2023 at a monthly rental of
RM700. In October 2023, Daud incurred RM900 to repair the
house.
2. Approved donation made by the partnership to an approved
institution amounting to RM10,000 to October 2023. Joe also
donated a computer costing RM2,000 to an unapproved
institution on 18 June 2023.
3. The partnership claimed capital allowance of RM12,000 on its
plant and machinery.
4. The provisional adjusted income of the partnership for the
basis year ended 31 December 2023 was RM210,000.

Required:

Compute the total income of Daud, Joe and Laila for the year of
assessment 2023. Round off your answer to the nearest RM.

1
Capital Allowance

Rangup Enak Sdn Bhd produces and sells tapioca chips for local
and neighbourhood countries such Singapore, Brunei and Thailand.
The business closes its account on 30 April every year.

On 10 May 2021, a computer has been brought for business

purpose. Prior to this, the computer has been used for personal use.
The market value and net book value on 10 May 2021 was RM4,800
and RM3,600 respectively.

A second hand car was purchased for RM80,000 on 1 November

2021. The car was not licensed for commercial use. Inland Revenue
Board agreed on the justifications three - quarter of its usage was
for business purpose. On 28 June 2023, the car was sold for
RM32,000.

On 6 July 2023, the business purchased a machine at cost

RM68,000. The business incurred RM12,000 cost of cutting, levelling
land to prepare the site for installation of the machine.

Required:

Calculate the capital allowance, balancing charges or allowances

(if any) of Rangup Enak Sdn Bhd for all relevant years of assessment
up to the year of assessment 2023.

2
Industrial Building Allowance

Semerbau Bhd was incorporated in 2012 and involved in

manufacturing business. The business closes its account on 31
December every year.

The business began constructed a new factory at total cost of

RM964,000 (including cost of land amounted RM224,000) in year
2021. The construction completed in 10 April 2022 and was
immediately used for business. However, 12% of the factory spaces
has been used as an office.

In 2022, the business enters into a built-lease-transfer contract with

Kementerian Kesihatan Malaysia to construct a Cure and Care
Center for RM2,450,300. The project was approved by Ministry of
Finance. The building was completed in 2022 and was leased to
the Government on 1 April 2023 for a period 10 years with monthly
leased payment of RM30,000.

On 1 March 2023, the company bought a residential house from

housing developer costing RM260,000. The house is used a living
quarters for factory production workers.

In August 2023, the company constructed another building for staff

canteen and recreation room within the factory compound at a
cost RM86,000. The constructed was completed on 20 November
2023 but it is only used starting January 2024.

Required:

Compute the industrial building allowance for year of assessment

2023.

3
Agriculture Allowance

Silver Hot Sdn Bhd (SHSB), a black pepper plantation company in

Johor closes its account on 30 November every year. The following
are capital expenditures incurred by the company.

Date Expenditure RM
01 Nov 2021 Land clearing and fertilizing 120,000
01 Dec 2021 Labour quarters 40,000
05 Jan 2022 Farm office 25,000

Later, on 30 September 2023, SHSB sold its entire assets to Diamond

Earth Sdn Bhd (DESB) due to financial problem. The accounting
year end for DESB is on 31 December every year.

Required:

a. Define new planting that qualifies for a person to claim for

agriculture allowance.

b. Compute the agriculture allowance or agriculture charge (if

any) for Silver Hot Sdn Bhd (SHSB) and Diamond Earth Sdn Bhd
(DESB) for all relevant years of assessment up to the year
assessment 2023. SHSB made an election under Paragraph 27 of
Schedule 3, Income Tax Act 1967.