240 Depreciation of van partially used in business (1:1)
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350
517
500
800 Amortization of Patents
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80
120
30
40 Impairment of Goodwill
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40
75
70
30 Amalgamation Expenses
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1000
1100
Adjustments for tax purposes: Group - A Q1. a. House rent of Mr. Ali Azmat Rs. 100,000/- is also included in total amount of Rent, which is not admissible for tax purpose. b. Bill of Rs. 500,000/- in utilities is belong to Ali Azmats home, which is not admissible for tax purpose. c. following payments are not allowed from business as these payments are personal expenses of the proprietor and income tax ordinance doesnt allow such kind of payments: 1. Foreign Travel 2. School Fee of Children 3. Repair of Personal Car
d. Commission payments to sales personnel of Rs. 100,000 have been paid without deduction of tax under head Sales Promotional Expenses, which is not admissible for deduction. Q2. a. Ali withdrew goods worth Rs. 10,000/- for his domestic use, while this amount is included in Cost of Sales. b. Made payment of Rs. 5000 to house gardener and the amount entered in Business Wages. c. following payments are not allowed from business as these payments are personal expenses of the proprietor and income tax ordinance doesnt allow such kind of payments: 1. Foreign Travel 2. School Fee of Children 3. Repair of Personal Car
Group B Q1. a. House rent of Mr. Ali Azmat Rs. 200,000/- is also included in total amount of Rent, which is not admissible for tax purpose. b. Bill of Rs. 50,000/- in utilities is belong to Ali Azmats home, which is not admissible for tax purpose. c. following payments are not allowed from business as these payments are personal expenses of the proprietor and income tax ordinance doesnt allow such kind of payments: 1. Foreign Travel 2. School Fee of Children 3. Repair of Personal Car
d. Income Tax Rules only admissible van depreciation of Rs. 150,000/- e. Impairment of Good Will is admissible of Rs. 30,000/-
Q2. a. Ali withdrew goods worth Rs. 10,000/- for his domestic use, while this amount is included in Cost of Sales. b. Made payment of Rs. 5000 to house gardener and the amount entered in Business Wages. c. following payments are not allowed from business as these payments are personal expenses of the proprietor and income tax ordinance doesnt allow such kind of payments: 1. Foreign Travel 2. School Fee of Children 3. Repair of Personal Car
d. Income Tax Rules only admissible van depreciation of Rs. 250,000/- e. Amortization of Patents is admissible of Rs. 90,000/- f. Salaries of Rs. 200,000 has been paid without deduction. While Salaries of Rs. 100,000 is also not admissible because Tax deducted from such amount is not deposited to FBR.
Group C
Q1. a. House rent of Mr. Ali Azmat Rs. 200,000/- is also included in total amount of Rent, which is not admissible for tax purpose. b. Bill of Rs. 50,000/- in utilities is belong to Ali Azmats home, which is not admissible for tax purpose. c. following payments are not allowed from business as these payments are personal expenses of the proprietor and income tax ordinance doesnt allow such kind of payments: 1. Foreign Travel 2. School Fee of Children 3. Repair of Personal Car
d. Income Tax Rules only admissible van depreciation of Rs. 150,000/- e. Impairment of Good Will is admissible of Rs. 30,000/- f. Income Tax Authorities allow deduction of Rs. 700,000/- with respect of amalgamation. g. Commission payments to sales personnel of Rs. 100,000 have been paid without deduction of tax under head Sales Promotional Expenses, which is not admissible for deduction.
Q2. a. Ali withdrew goods worth Rs. 10,000/- for his domestic use, while this amount is included in Cost of Sales. b. Made payment of Rs. 5000 to house gardener and the amount entered in Business Wages. c. following payments are not allowed from business as these payments are personal expenses of the proprietor and income tax ordinance doesnt allow such kind of payments: 1. Foreign Travel 2. School Fee of Children 3. Repair of Personal Car
d. Income Tax Rules only admissible van depreciation of Rs. 250,000/- e. Amortization of Patents is admissible of Rs. 90,000/- f. Income Tax Authorities allow deduction of Rs. 500,000/- with respect of amalgamation. g. Rent of Rs. 300,000 has been paid without deduction of Tax h. Salaries of Rs. 600,000 are not admissible because Tax deducted from such amount is not deposited to FBR.