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Answer Tutorial 6 Capital Allowance

This document contains an answer scheme for a tutorial on capital allowance. It provides examples of calculating qualifying expenditure and capital allowance for various asset purchases. The examples include machines, vehicles, and site preparation costs. Qualifying expenditure is determined based on the lower of net book value or market value for transferred assets, and purchase price for new and used assets. Capital allowance is then calculated by applying the annual allowance rate to the qualifying expenditure.

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athirah jamaludin
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3K views

Answer Tutorial 6 Capital Allowance

This document contains an answer scheme for a tutorial on capital allowance. It provides examples of calculating qualifying expenditure and capital allowance for various asset purchases. The examples include machines, vehicles, and site preparation costs. Qualifying expenditure is determined based on the lower of net book value or market value for transferred assets, and purchase price for new and used assets. Capital allowance is then calculated by applying the annual allowance rate to the qualifying expenditure.

Uploaded by

athirah jamaludin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Taxation II

Tutorial 6
Capital Allowance
ANSWER SCHEME

1. Arjuna Sdn Bhd bought a new machine with a price of RM500,000. To prevent loud noise
of the engine being heard on other floors, the existing building needed to be altered to
install sound-proof walls. The alteration cost was RM150,000. On top of that, the company
need to inccur leveling cost RM20,000 to place the machine. Compute the qualifying
expenditure.

Answer:

QE = RM 500,000 + RM150,000 + RM20,000 = RM670,000

2. An egg whisking machine costing RM150,000 was installed in a bread and cake factory.
A site was prepared for the machine and the cost of preparing the site was RM10,000 in
scenario 1 and RM20,000 in scenario 2. Compute the qualifying expenditure.

Answer:

Scenario 1
10% of AC = RM16K
Preparing cost= RM10k < 16k
QE = RM160,000
Scenario 2
10% of AC = RM17K
Preparing cost= RM20k > 17k
QE = RM150,000
3. Super Sdn Bhd carries on a business outside Malaysia and headquartered in Perth,
Australia. On 01.04.2014, two machines in Perth were transferred and used for business
in its branches in Malaysia. Business accounts are prepared for the period ending 31
March 2015. On 01.04.2014, the net book value of the machines was RM600,000 while
the market value was RM900,000. Compute the qualifying expenditure and capital
allowance for the first year.

Answer:
Lower of NBV or MV

Computation of Capital Allowance


YA of 2014 RM
QE 600,000
(-) AA (RM600k x 20%) (120,000)
Residual expenditure 480,000

YA of 2015
(-) AA (RM600k x 20%) (120,000)
Residual expenditure 360,000

4. Madu Asli Sdn Bhd purchased a used vehicle in January 2015 costing RM90,000. The
vehicle is not licensed as a commercial vehicle. Compute the qualifying expenditure and
capital allowance for the first year.

Answer:
Computation of Capital Allowance
YA of 2015 RM
QE (Used car) 50,000
(-) AA (RM50k x 20%) (10,000)
Residual expenditure 40,000

5. Eden Sdn Bhd purchased a reconditioned four-wheel drive vehicle on 22.03.2014 for
RM145,000. The vehicle is licensed as a commercial vehicle. Compute the qualifying
expenditure and capital allowance for the first year. (A bit of changes in the question)
Answer:

Computation of Capital Allowance


YA of 2014 RM
QE (Commercial) 145,000
(-) AA (RM145k x 20%) (29,000)
Residual expenditure 116,000

6. A reconditioned van costing RM35,000 was bought by Jaya Sdn Bhd for transporting the
company’s workers and it was not licensed as a commercial vehicle. The reconditioned
van had been overhauled with parts of high quality and it had undergone functional and
safety tests until the van appeared ‘new’. Compute the qualifying expenditure and capital
allowance for the first year. (A bit of changes in the question)

Answer:

Computation of Capital Allowance


RM
QE (MV reconditioned car) 35,000
(-) AA (RM35k x 20%) (7,000)
Residual expenditure 28,000

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