河北省2021年ACCA考试报名时间

3 Palm plc recently acquired 100% of the ordinary share capital of Nikau Ltd from Facet Ltd. Palm plc intends to use

Nikau Ltd to develop a new product range, under the name ‘Project Sabal’. Nikau Ltd owns shares in a non-UK

resident company, Date Inc.

The following information has been extracted from client files and from a meeting with the Finance Director of Palm

plc.

Palm plc:

– Has more than 40 wholly owned subsidiaries such that all group companies pay corporation tax at 30%.

– All group companies prepare accounts to 31 March.

– Acquired Nikau Ltd on 1 November 2007 from Facet Ltd, an unrelated company.

Nikau Ltd:

– UK resident company that manufactures domestic electronic appliances for sale in the European Union (EU).

– Large enterprise for the purposes of the enhanced relief available for research and development expenditure.

– Trading losses brought forward as at 1 April 2007 of ￡195,700.

– Budgeted taxable trading profit of ￡360,000 for the year ending 31 March 2008 before taking account of ‘Project

Sabal’.

– Dividend income of ￡38,200 will be received in the year ending 31 March 2008 in respect of the shares in Date

Inc.

‘Project Sabal’:

– Development of a range of electronic appliances, for sale in North America.

– Project Sabal will represent a significant advance in the technology of domestic appliances.

– Nikau Ltd will spend ￡70,000 on staffing costs and consumables researching and developing the necessary

technology between now and 31 March 2008. Further costs will be incurred in the following year.

– Sales to North America will commence in 2009 and are expected to generate significant profits from that year.

Shares in Date Inc:

– Nikau Ltd owns 35% of the ordinary share capital of Date Inc.

– The shares were purchased from Facet Ltd on 1 June 2003 for their market value of ￡338,000.

– The sale was a no gain, no loss transfer for the purposes of corporation tax.

– Facet Ltd purchased the shares in Date Inc on 1 March 1994 for ￡137,000.

Date Inc:

– A controlled foreign company resident in the country of Palladia.

– Annual chargeable profits arising out of property investment activities are approximately ￡120,000, of which

approximately ￡115,000 is distributed to its shareholders each year.

The tax system in Palladia:

– No taxes on income or capital profits.

– 4% withholding tax on dividends paid to shareholders resident outside Palladia.

Required:

(a) Prepare detailed explanatory notes, including relevant supporting calculations, on the effect of the following

issues on the amount of corporation tax payable by Nikau Ltd for the year ending 31 March 2008.

(i) The costs of developing ‘Project Sabal’ and the significant commercial changes to the company’s

activities arising out of its implementation. (8 marks)

4 Coral is the owner and managing director of Reef Ltd. She is considering the manner in which she will make her first

pension contributions. In November 2007 she inherited her mother’s house in the country of Kalania.

The following information has been extracted from client files and from telephone conversations with Coral.

Coral:

– 1972 – Born in the country of Kalania. Her father, who died in 2002, was domiciled in Kalania.

– 1999 – Moved to the UK and has lived and worked here since then.

– 2001 – Subscribed for 100% of the ordinary share capital of Reef Ltd.

– Intends to sell Reef Ltd and return to live in the country of Kalania in 2012.

– No income apart from that received from Reef Ltd.

Reef Ltd:

– A UK resident company with annual profits chargeable to corporation tax of approximately ￡70,000.

– Four employees including Coral.

– Provides scuba diving lessons to members of the public.

Payments from Reef Ltd to Coral in 2007/08:

– Director’s fees of ￡460 per month.

– Dividends paid of ￡14,250 in June 2007 and ￡14,250 in September 2007.

Pension contributions:

– Coral has not so far made any pension contributions in the tax year 2007/08 but wishes to make gross pension

contributions of ￡9,000.

– The contributions are to be made by Reef Ltd or Coral or a combination of the two in such a way as to minimise

the total after tax cost.

– Any contributions made by Coral will be funded by an additional dividend from Reef Ltd.

House in the country of Kalania:

– Beachfront property with potential rental income of ￡550 per month after deduction of allowable expenditure.

– Coral will use it for holidays for two months each year.

The tax system in the country of Kalania:

– No capital gains tax or inheritance tax.

– Income tax at 8% on income arising in the country of Kalania.

– No double tax treaty with the UK.

Required:

(a) With the objective of minimising the total after tax cost, advise Coral as to whether the gross pension

contributions of ￡9,000 should be made:

– wholly by Reef Ltd; or

– by Coral to the extent that they are tax allowable with the balance made by Reef Ltd.

Your answer should include supporting calculations where necessary. (9 marks)

12 Which of the following statements are correct?

(1) Contingent assets are included as assets in financial statements if it is probable that they will arise.

(2) Contingent liabilities must be provided for in financial statements if it is probable that they will arise.

(3) Details of all adjusting events after the balance sheet date must be given in notes to the financial statements.

(4) Material non-adjusting events are disclosed by note in the financial statements.

A 1 and 2

B 2 and 4

C 3 and 4

D 1 and 3