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Practical Question 9- Tax On Profit for Trading Company

Gold Trading Company is a merchandising company incorporated in Cambodia in 2014. Gold Trading Company purchases and sells phones, LCD and computers to local customers and distributers.  Under the tax regulations, Gold Trading Company is required to calculate and pay annual Tax on Profit. The following extracts for provisions have been provided by Gold Trading Company’s accountant in relation to the tax year ended 31 December 2016.

  • Beginning provision for warranty expense of $2,000 of sold products.
  • During December 2016, company has re-assessed the provision for sold product warranty and has decided that the provision should be $3,000.
  • One customer of customers purchased products from company during year filed bankruptcy, this client owed company $5,000, so Gold Trading Company decided to write off this trade receivable.
  • Beginning doubtful trade receivables of $1,000, and total trade receivables (excluding trade receivable of $5,000) of $100,000 are estimated 2% is irrecoverable debt.

Required:

  1. Define any expenses according to accounting policy, and complete relevant financial figures accordance with tax form requirement from page 3/16 to 13/16 if any.
  2. Define any expenses according which are allowed by tax law, and complete relevant financial figures accordance with tax form requirement from page 3/16 to 13/16 if any.
  3. Complete any financial figures in Provision Calculation Table page 16/16 according to tax form requirement.

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