CAPITAL ALLOWANCE
QUESTION 1
Alloy Sdn Bhd, prepares its accounts to September 30 annually, carries on an aluminium glass
business in a rented building. Information regarding fixed assets transactions is given below:
1. Motor vehicles: Honda Accord (non-commercial)
Second hand motorcar (acquired by hire purchase on 1 February 2014)
Cash price RM108,000
Deposit RM48,000 (paid 1 February 2014)
Amount of each installment RM1,500
There were 60 monthly installments commencing on 1 October 2014
The motor vehicle was sold on 26 September 2016 for RM98,000
2. Lorry (acquired by cash on 1 August 2015)
Cost of lorry when it was acquired was RM140,000. On 15 July 2017, the lorry was
sold for RM120,000
3. General machinery
Previously used for non-business purpose and brought into the business on 1 July
2016. The market value and net book value on the day it was brought into the business
was RM55,000 and RM50,000 respectively. The business also incurred cost of
preparing site amounting to RM 5,000.
Required:
Compute the capital allowances, balancing charges or allowances (if any) that can be claimed
by Alloy Sdn Bhd for all the relevant years of assessment up to year 2017.
(12 marks)
QUESTION 2
Kuhara Enterprise (SMI Enterprise), owned by Kuhara closes its account on 31 December
annually. The following information related to the acquisition and disposal of assets during the
year 2017 by Kuhara Enterprise:
i. A second hand van was acquired on 12 May 2015 costing RM60,000. It was agreed by
the IRB that 60% of the van was use for business purpose. On 30 April 2017, the van was
disposed for RM24,000.
ii. On 1 December 2017, the company acquired 15 units of filing shelves. Each of the filing
shelves was costing RM1,200.
iii. A machine was purchased on 1 March 2015 costing to RM135,000 under hire purchase
agreement. On the acquisition day, the business paid a deposit of RM35,000. The
remaining balance will be paid of RM2,500 per installment payable over 50 monthly
installments commencing on 30 April 2015. On 1 December 2017, the machine was
disposed for RM20,000 when the market value was RM30,000.
Required:
Calculate the capital allowances, balancing charges or allowances (if any) of Mega Bhd for all
relevant years of assessment up to the year of assessment 2017.
(12 marks)
QUESTION 3
Rider Sdn Bhd (a SMI company) closes its account on 31 December annually. Below is some
information with regards to its assets:
Assets Note Cost Residual Net book value as
expenditure as at at 31 December
31 December 2016 2016
Van (commercial) 1 RM160,000 RM32,000 RM64,000
Computer 2 RM5,600 RM1,000 RM4,200
Honda Civic 3 RM140,000 RM40,000 RM65,000
(non-commercial)
Notes:
1. The van was acquired on 1 January 2014. On 30 September 2017, the van was traded
in with a new car which was costing RM180,000. The trade in value was RM27,000
and the remaining balance was paid by cheque immediately. The market value of the
van when it was traded in was RM35,000. The new car was solely used for general
manager of the company. IRBM acknowledged that 70% of the car usage was for
business purpose.
2. The computer was acquired on 1 January 2016 for personal use. However, on 1
August 2016, the computer was brought into use in the company. The market value of
the computer on the day it was brought into business use was RM5,000.
3. Honda Civic car was acquired on 1 August 2015 on cash basis. However, on 15 July
2017, the company sold the car for RM50,000. Up to year of assessment 2016, the
accumulated capital allowance for this car was RM60,000.
Additional information:
a. A machine was acquired under a hire purchase agreement on 30 June 2017. The hire
purchase term was stipulated as follows:
Cash Price RM250,000
Deposit RM20,000
Installment 40 monthly installments of RM6,000
each
First installment Due on 1 September 2015
b. On 31 October 2017, the company purchased 15 units of cabinets for RM1,200 each.
c. A second hand machine was previously used at Vietnam branch was brought into used
in the company on 1 September 2017. The market value and the net book value on
the day it was brought into business use in Malaysia was RM95,000 and RM80,000
respectively. The company incurred cost of preparing site amounting to RM5,000 to
install the machine for its intended use.
Required:
Calculate the capital allowances, balancing charges or allowances (if any) of Rider Sdn
Bhd for the year of assessment 2017.
(12 marks)
QUESTION 4
Pak Tam Enterprise closes its accounts on 31 December each year. Below is the information
on its non-current assets used for the purpose of the business:
Type of Non-current asset Qualifying expenditure Residual expenditure as at
31 December 2016
RM RM
Office equipment 80,000 40,000
Machine A 120,000 62,400
Fixture & fittings 20,000 10,000
Additional information:
During the basis period ended 31 December 2017, the following transactions took place:
1. Machine A was sent for a regular repair on 30 September 2017. It was expected that the
machine would be repaired for three months and the cost of repairing was RM10,000.
The business has an intention of disposing it in year of assessment 2018 at RM60,000.
2. The above fixture and fittings were traded in with new fixtures on 31 March 2017, the trade
in value was RM6,000 and the cost of the new furniture and fittings was RM18,000. The
old fixture and fittings were purchased on 1 October 2015.
3. On 31 July 2017, Machine B was brought into a business in Malaysia from Singapore.
The market value and net book value on the date of transfer were RM20,000 and
RM25,000 respectively. Pak Tam Enterprise incurred RM2,000 on cost of preparing site
for the installation of the machine made on the date of transfer.
4. On 15 August 2015, Pak Tam Enterprise purchased a new BMW car registered under the
business’ name. The cost of the car was RM252,000 and it was acquired on hire purchase
term. A deposit of RM25,200 was paid on 1 September 2015, the balance would be settle
in 84 monthly instalments of RM3,500 with the first instalment due on 1 October 2015. It
was agreed that 60% of the usage was for business use. However, the business decided
to dispose the car on 30 September 2017 at RM150,000.
Required:
Compute capital allowance and balancing charge/allowance (if any) for the year of
assessment 2017.
(15 marks)
QUESTION 5
Cahaya Bulan Sdn Bhd was incorporated on 1 February 2003 and closes its account on 31
January every year. The following assets were acquired by Cahaya Bulan Sdn Bhd:
1. A printer was purchased on 1 October 2014 for RM6,000. On 15 March 2016, Cahaya
Bulan Sdn Bhd decided to buy a new printer costing RM9,000. The old printer was traded
in with the new printer at a value of RM1,200.
2. A van used for delivery of goods to customers was acquired on hire purchase term. The
cash price of the van was RM155,000. A down payment of RM45,000 was paid on 1
March 2014. The balance would be settled in a 50 monthly instalments of RM2,500 per
month with the first instalment due in the following month. It was agreed that only 70% of
the usage was for business use.
Required:
Compute the capital allowances, balancing charges or allowances (if any) that can be claimed
by Cahaya Bulan Sdn Bhd for all the relevant years of assessment up to the year of
assessment 2017.
(11 marks)
