Practical Question 10- Tax On Profit

Section A

Please choose the following non-deductible expenses or deductible expenses according to tax law for each question.

1. Company makes Khmer Yew Year party for staff of $2,000.

A. Non-deductible expenses

B. Deductible expenses

2. Accounting depreciation expense of $3,000.

A. Non-deductible expenses

B. Deductible expenses

3. Company makes provision policy for warranty expense of 2% of sold product sale.

A. Non-deductible expenses

B. Deductible expenses

4. Salary expense of $10,000.

A. Non-deductible expenses

B. Deductible expenses

5. Company submitted monthly tax payment late, so tax admin requires company pay interest rate of 2% of total tax payment.

A. Non-deductible expenses

B. Deductible expenses

6. Advertising expense during year of $10,000.

A. Non-deductible expenses

B. Deductible expenses

Section B

AZC is a new company incorporated in Cambodia in 2014. Under the tax regulations, AZC is required to calculate and pay annual Tax on Profit.

The following extracts of transactions for fixed assets in relation to the tax year ended 31 December 2015.

• On 30 May, Purchased new computer software of $5,000.
• On 20 June, company purchase meeting tables of $2,000 inclusive of 10% VAT.
• On 12 November, company purchased a generator of $1,000 inclusive of 10% VAT.

The cost of building at 1 January 2014 was $100,000.

Required:

Calculate Tax depreciation 2015 for the following fixed asset classes:

1. Class 2
2. Class 1
3. Class 3
4. Class 4

Section C

AAA Website Service Company Co., Ltd is company that designs website, database and other customized software for customers nationwide.

 

Under the tax regulations, AAA Website Service Company Co., Ltd is required to calculate and pay annual Tax on Profit. AAA Website Service Company Co., Ltd is subject to profit tax rate of 20%. Company has capital of $50,000.

 

Expenses and payments from each month for 2015 as follows:

 

Month	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Total
Salary Expense	4,000	4,000	4,000	3,350	3,350	4,000	4,000	4,000	4,000	4,000	4,000	4,000	46,700
Tax on Salary	149	149	149	125	125	149	149	149	149	149	149	149	1,740
Net Expense for Rental (Note 1)	400	400	400	400	400	400	400	400	400	400	400	400	4,800
Purchase Car		20,000											20,000
Purchase photocopy machine			2,000										2,000
Purchase Computers	3,000												3,000

Additional Expenses as follows:

• Patent expense of $285.
• Advertising expense is $5,000.
• Fuel expenses of $1,000
• Office supplies expense of $600
• Other Expenses of $800

The notes as follows:

1. AAA Website Service Company Co., Ltd paid withholding tax for rental on behalf of lessor.
2. Withholding tax rate of 10%.
3. Withholding tax, tax on salary, prepayment of profit tax and VAT output occurred during months are paid to tax admin the following months.

Service revenues from each month for 2015 as follows:

Month	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Total
Revenue	2,000	5,000	7,000	–	7,720	–	7,750	4,900	–	1,000	–	4,864	40,234
VAT Output	200	500	700	–	772	–	775	490	–	100	–	486	4,023
Prepayment of Profit Tax	20	50	70	–	77	–	78	49	–	10	–	49	402

Required:

Because cost of services supplied (B 5.1) is difficult to classify which costs are direct expenses related with services earned from customers, so company decided to ignore B 5.1.

Ignore other information, solve the following issues:

1. Prepare income statement
2. Prepare balance sheet
3. Declare tax on profit and complete financial figures (2015) if any accordance with tax form requirement from page 3/16 to 16/16.