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Mirichu Ltd. processes milk for sale in the local market.The company started its operations on 1 January 2012 after constructing two factory building at a...
(Solved)
Mirichu Ltd. processes milk for sale in the local market.The company started its operations on 1 January 2012 after constructing two factory building at a cost of Sh.9 million each. Other assets acquired by the company on commencement of its operations included
Determine:
a) The capital allowances due to Mirichu Ltd. for the year ended 31 December 2012.
b) The taxable profit or loss for Mirichu Ltd. for the year ended 31 December 2012.
c) The tax- payable, if any, for the year ended 31 December 2012.
Date posted:
February 14, 2019
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Answers (1)
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Jawabu Ltd. commenced its operations on 1 January 2011 after obtaining a licence to manufacture leather bags for export.
Determine Capital allowances due to Jawabu Ltd....
(Solved)
Jawabu Ltd. commenced its operations on 1 January 2011 after obtaining a licence to manufacture leather bags for export.
The following information relates to the company's operations for the financial years ended 31 December 2011 and 2012:
Determine Capital allowances due to Jawabu Ltd. for each of the two years ended 31 December 2011 and 2012.
Date posted:
February 14, 2019
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Answers (1)
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Poland Mining Company Ltd. started prospecting for titanium in Mombasa in year 2011. Expenditure relating to research, testing and winning access to titanium amounted to...
(Solved)
Poland Mining Company Ltd. started prospecting for titanium in Mombasa in year 2011. Expenditure relating to research, testing and winning access to titanium amounted to Sh.240 million. The company paid Sh.720 million to the government to acquire rights over the titanium and Sh.210 million for the purchase of land.
The following assets were constructed or purchased during the year 2012:
1. Two graders were purchased at a total cost of Sh.16, 000,000.
2. A forklift was acquired at a cost of Sh.6, 000,000.
3. A store was constructed at a cost of Sh.36, 000,000
4. Office furniture was acquired at a cost of Sh.2, 400,000.
5. Labor quarters were constructed at a cost of Sh.42, 000,000.
6. Ten Lorries (5 tonnes each) were acquired at a total cost of Sh.30, 000,000.
7. Specialized processing machines for mining were acquired at a cost of Sh.960, 000,000.
8. A staff clinic was constructed at a cost of Sh.12, 000,000 .
9. Computers were purchased at a cost of Sh.480, 000.
10. A ship (600 tonnes) was acquired at a cost of Sh.450, 000,000.
11. Three saloon cars for official use were acquired at a total cost of Sh.9, 000,000.
Determine Capital allowances due to Poland Mining Company Ltd. for the two years ended 31 December 2012 and 31 December 2013
Date posted:
February 14, 2019
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Answers (1)
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Dellite Ltd. is a manufacturing company which commenced business on 1st October 2013 after incurring the following capital expenditureDetermine Capital allowances due to Dellite Ltd. for...
(Solved)
Dellite Ltd. is a manufacturing company which commenced business on 1st October 2013 after incurring the following capital expenditure
Determine Capital allowances due to Dellite Ltd. for the year ended 30 September 2014
Date posted:
February 14, 2019
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Answers (1)
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Maina, Otieno and Korir are in a partnership trading as Moko enterprises and sharing profits and losses in the ratio of 2:2:1 respectively
Determine:
i. Adjusted taxable...
(Solved)
Maina, Otieno and Korir are in a partnership trading as Moko enterprises and sharing profits and losses in the ratio of 2:2:1 respectively
The following income statements was prepared by the partnership for the year ended 31 December 2007
Determine:
i. Adjusted taxable profit or loss of the partnership for the year ended 31 December 2007
ii. A schedule showing the taxable income of each partner for the year ended December 2007
Date posted:
February 14, 2019
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Answers (1)
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List four types of dividend income which are exempted from tax in your country
(Solved)
List four types of dividend income which are exempted from tax in your country
Date posted:
February 14, 2019
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Answers (1)
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Mr. Ayub Simuyu is a senior manager with Lipa Enterprises limited. He is based at the company‘s headquarters in Nairobi
Mr. Ayub Simuyu has provided the...
(Solved)
Mr. Ayub Simuyu is a senior manager with Lipa Enterprises limited. He is based at the company‘s headquarters in Nairobi
Mr. Ayub Simuyu has provided the following information on his employment and other income for the year ended 31 December 2007
Determine:
i. Taxable income of Mr. Mr. Ayub Simuyu for the year ended 31 December 2007
ii. Tax payable on the income computed in (i) above
Date posted:
February 14, 2019
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Answers (1)
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With respect to repayment of installment tax, distinguish between agricultural and non- agricultural entities
(Solved)
With respect to repayment of installment tax, distinguish between agricultural and non- agricultural entities
Date posted:
February 14, 2019
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Answers (1)
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Mr. Ben Chuma was employed by Mwanzo Limited as human resource director with effect from 1 January 2007
Determine:
i) Taxable incomes of Mr. and Mrs. Chuma...
(Solved)
Mr. Ben Chuma was employed by Mwanzo Limited as human resource director with effect from 1 January 2007
Determine:
i) Taxable incomes of Mr. and Mrs. Chuma for the year ended 31 December 2007
ii) Tax liability (liabilities) accruing from the incomes computed in (i) above
Date posted:
February 14, 2019
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Answers (1)
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Bora Limited presented the following trading profit and loss account for the year ended 31 December 2007
Determine:
i) Adjusted taxable profit or loss of Bora Limited...
(Solved)
Bora Limited presented the following trading profit and loss account for the year ended 31 December 2007
Determine:
i) Adjusted taxable profit or loss of Bora Limited for the year ended 31 December 2007
ii) Tax liability (if any) arising from the profit or loss accounted in (i) above
Date posted:
February 14, 2019
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Answers (1)
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Explain how tax policy can be used to promote the growth of small and medium size enterprises (SME‘s) in your country
(Solved)
Explain how tax policy can be used to promote the growth of small and medium size enterprises (SME‘s) in your country
Date posted:
February 14, 2019
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Answers (1)
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Jostina and Maweu are partners running a hardware business based in Nanyuki town. They have approached you to assist them prepare the partnership returns for...
(Solved)
Jostina and Maweu are partners running a hardware business based in Nanyuki town. They have approached you to assist them prepare the partnership returns for the year ended 31 December 2008. The following information has been presented to you
Determine:
a) Taxable profit or loss of the partnership for the year ended 31 December 2008
b) A schedule showing the allocation of taxable income / loss to partners
Date posted:
February 14, 2019
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Answers (1)
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The management of Haraka Company Ltd has not been maintaining proper books of account. You have been engaged by the management at a fee of...
(Solved)
The management of Haraka Company Ltd has not been maintaining proper books of account. You have been engaged by the management at a fee of Sh1,500,000 to ascertain the company's tax position. The following information has been availed to you for the year ended 31 December 2008:
Determine:
(a) Taxable profit of Haraka Company Ltd. for the year ended 31 December 2008.
(b) Tax liability accruing from the profit computed In (a) above.
(c) Assuming that the company's tax liability in year 2007 was Sh.300,000, show how and when tax computed in (b) above would be paid.
Date posted:
February 14, 2019
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Answers (1)
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Joma, Sego and Kali are partners operating under the name Joseka Enterprises. They share profits and losses in the ratio of 3:1:1 for Joma, Sego...
(Solved)
Joma, Sego and Kali are partners operating under the name Joseka Enterprises. They share profits and losses in the ratio of 3:1:1 for Joma, Sego and Kali respectively.
The business started operations on I January 2009 by purchasing a go-down constructed in 1960 for Sh.2,000,000 and renovating it at a cost of Sh.3,600,000 for use as a factory. The purchase cost of the go-down included the cost of land amounting to Sh.1,000,000. One third of the renovated factory area is used as a warehouse for raw materials and finished goods.
The following additional assets were acquired before commencement of operations:
Determine, for the year ended 31 December 2009:
(i) The adjusted taxable profit for the partnership.
(ii) The taxable income for each of the partners
Date posted:
February 14, 2019
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Answers (1)
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Companies undergoing the process of liquidation are required to address a number of issues, one of which concerns taxation of the income received by the...
(Solved)
Companies undergoing the process of liquidation are required to address a number of issues, one of which concerns taxation of the income received by the company or distributed to shareholders as dividend.
In the context of the above statement, briefly explain the taxation of the following:
i) Income received by company under liquidation.
ii) Dividend distributed to shareholders during the process of liquidation.
Date posted:
February 13, 2019
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Answers (1)
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Rift Valley Ltd. is in the business of farming. The following income statement was obtained from the books of the company for the year ended...
(Solved)
Rift Valley Ltd. is in the business of farming. The following income statement was obtained from the books of the company for the year ended 31 December 2009:
Prepare:
(i) A statement of adjusted taxable profit (or loss) for the year ended 31 December 2009.
(ii) Tax payable (if any) by the company
Date posted:
February 13, 2019
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Answers (1)
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Amos Mamboleo has not been filing his annual income tax returns since he was employed. The revenue authority has issued him with an assessment for...
(Solved)
Amos Mamboleo has not been filing his annual income tax returns since he was employed. The revenue authority has issued him with an assessment for the year 2010 of Sh.1,200,000 which he refutes. He has approached you for advice and has provided the following details:
1. Basic salary Sh.120,000 (pay as you earn tax Sh. 17,500) per month.
2. The employer contributed for him Sh.8,000 per month to his children‘s education insurance policy.
3. He had salary arrears for the year 2009 of Sh400,000 which he was paid on 1 July 2010. His gross salary during the year 2009 was Sh960,000 (pay as you earn tax Sh184,000)
4. He secured a bank loan on 1 October 2010, of sh.4,800,000 at 15% interest per month which he used to purchase a house. He leased the house to the employer at a monthly rental income of Sh 80,000 which effect from 1 November 2010.
5. He is housed by the employer in a leased house where the company pays rent on quarterly basis of Sh300,000 per quarter.
6. He controls 18% of the share capital issued by the employer. During the year ended 31 December 2010, he received dividends on the shares of Sh.95,000 net of withholding tax.
7. He uses a company car of the employer has leased at a monthly charge of Sh40,000.
8. His other income comprised:
Prepare:
(i) Taxable income and the tax thereon for Amos Mamboleo for the year ended 31 December 2010.
(ii) Advise Amos Mamboleo on whether he should object to the assessment issued by the revenue authority.
Date posted:
February 13, 2019
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Answers (1)
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Malipo Ltd. is in the business of packaging flowers for the export market. The following is the draft statement of comprehensive income for the year...
(Solved)
Malipo Ltd. is in the business of packaging flowers for the export market. The following is the draft statement of comprehensive income for the year ended 31 December 2010:
Prepare:
(i) A statement of adjusted taxable profit or loss for the company for the year ended 31 December 2010.
(ii) Tax payable (if any) by the company for the year ended 31 December 2010.
Date posted:
February 13, 2019
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Answers (1)
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Outline four roles of professional ethics in tax practice
(Solved)
Outline four roles of professional ethics in tax practice
Date posted:
February 13, 2019
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Answers (1)
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Alex Karama is employed by Ziada Ltd. as a sales manager. He has provided the following information relating to his income for the year ended...
(Solved)
Alex Karama is employed by Ziada Ltd. as a sales manager. He has provided the following information relating to his income for the year ended 31 December 2010
1. His monthly basic salary was Sh.50,000 (pay as you earn (PAYE) Sh.14,800 per month).
2. He was also entitled to a commission of 5% based on average monthly sales made in a year. The average sales per month during the year amounted to Sh.l04,400 inclusive of value added tax (VAT) at the rate of 16%.
3. He lived in a company house until 30 September 2010 and paid a nominal rent of Sh.5,000 for the house. The market rental value of houses in the estate was Sh.50,000 per month.
4. He was provided with a company car of 2400 cc whose cost at the time of purchase was Sh.800,000. The car was purchased in year 2008. Depreciation on motor vehicles is at the rate of 20% per annum on cost
5. The education fees for his two daughters amounting to Sh360,000 were paid by the company The company had not debited the fees in the statement of comprehensive income for the year ended 31 December 2010
6. He purchased a house and moved in on 1 October 2010, through a mortgage loan of Sh.5,000,000 at an interest rate of 12% per annum. The initial deposit of Sh.1,400,000 was advanced to him by the company at an interest rate of 8% per annum. The market interest rate during the period was 10% per annum.
7. He is a member of a home ownership savings plan, and contributed Sh.5,000 per month up to the acquired the mortgage loan.
8. He has a life assurance policy where the company paid Sh.10,000 for him per month.
9. He holds 12% of the share capital of Ziada Ltd. while his wife controls 6% of the share capital in the company
10. Both Mr Alex Karama and the wife contributed to a registered pension scheme Sh.36,000 per month while the employer contributed an equal amount.
11. He received dividends from Chai Co-operative Society Ltd. of Sh.34,000 (net) and interest on 30 year infrastructure bonds of Sh.36,000 (gross) during the year.
12. He received a monthly pension ofSh.25,000 from a previous employer.
13. His other income during the year included:
- Professional loss for the year Sh.64,000 (part-time consultancy).
- Rental income Sh.420,000 excluding cost of purchase of furniture Sh.90,000.
- Farming loss Sh.124,000.
Compute for Mr Alex Karama for the year ended 31 December 2010:
(i) Taxable income.
(ii) Tax liability.
Date posted:
February 13, 2019
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Answers (1)