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With reference to section 46 and 47 of the income tax Act (cap 470) explain how the incomes of the following persons are assessed for tax.
i) Incapacitated persons
ii) Nonresident persons
Date posted:
February 26, 2019
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Mavuno Ltd. is a small scale company that specializes in the production of farm tools.
The company uses budgets for planning and controlling its activities. Currently the management are
preparing budgets for the three months ending 31 March 2006.
The projected balance sheet as at 31 December 2005 is shown below:
Additional information:
1. The company sells the farm tools at a mark up of 25 %.
2. Purchase of materials stocks is on credit and it is paid for in the month of receipt by the
company
3. Employees are paid wages at the end of every week with the earnings of the last week of the
month being settled in the following month (Assume one month has 4 weeks).
4. Sales commission is paid on month in arrears at the rate of 1% of sales.
5. Overheads include a monthly depreciation charge of Sh. 25,000.
6. 25% of the sales are on cash basis. The other 75% is receivable two months after the sale.
7. The company will receive a loan of Sh.2, 500,000 in the month of March 2006 from Wakulima
Bank.
8. Old equipment will be sold for sh.250, 000 in February 2006 and new equipment will be
purchased at Sh.1, 200,000 to replace the old equipment sold. The new equipment will be paid
for in month of March 2006.
9. Rent is paid for quarterly in advance in the months of January, April, July and October
Required:
(a) Cash budget for the three months ending 31 March 2006.
(b) Budgeted trading profit and loss account for the three months ending 31 March 2006
(c) Budgeted balance sheet as at 31 March 2006.
Date posted:
February 26, 2019
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Outline two types of capital allowances granted to companies manufacturing bond.
Date posted:
February 26, 2019
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Write brief notes on Tax-free employment benefits
Date posted:
February 26, 2019
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Define the term 'tax planning'
Date posted:
February 26, 2019
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Write brief notes on Exempt interest income
Date posted:
February 26, 2019
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Write brief notes on Fringe benefit tax
Date posted:
February 26, 2019
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Starlit company Ltd. has been operating in Kenya Since 1 January 2003. The company is a subsidiary of Mega Holdings Ltd. which is used on the United Kingdom.
The financial statements of Starlit Company Ltd. for the year ended 31 December 2005 are presented below.
Date posted:
February 26, 2019
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Related companies may understate their taxable profits by engaging in transfer pricing. With reference to Section 18 (3) of the Income Tax Act (Cap. 470), briefly explain three transactions that may constitute transfer pricing."
Date posted:
February 26, 2019
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Explain the methods applied in adjusting transfer prices.
Date posted:
February 26, 2019
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Explain the meaning of transfer pricing?
Date posted:
February 26, 2019
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Kamere Ltd. commenced manufacturing operations on 1 January 2003. The management of the company has prepared the following financial statement for the year ended 31 December 2005.
Balance sheet as at 31 December 2005
Additional information:
1. Non-current assets are stated net of depreciation including for year 2005. It is the policy of the company to charge depreciation at 20 % per annum on a straight line method.
2. The company has not claimed capital allowance since it commenced operations.
3. The company's reported taxable profits for the year ended 31 December 2003 and 2004 were sh.8,000,000 andsh.6,400,000 respectively
4. Factory building includes an extension to the factory constructed at a cost of sh. 1,600,000 which was put into use on I January
5. Machinery include generator and conveyor belts bought for sh. 1,400,000 and sh. 800,000 respectively.
6. Motor vehicles include a forklift purchased in 2003 at sh. 1,160,000.
7. A saloon car purchased in year 2004 at sh. 1,200,000 was disposed of during the year 2005 for sh. 600,000 no adjustment have been made to record this disposal.
8. The loan was received on 1 January 2005 and is subject to interest at the rate of 8% per annum
Required:
i) Capital allowances due to Kamere Ltd. for each of the three years ended 31 December 2003 , 2004, and 2005
ii) Adjusted taxable profit or loss for the company in each of the three years above.
Date posted:
February 26, 2019
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Distinguish between the following sets of terms:-
i) Budgetary slack an principal budget factor
ii) Pudding the budget and rolling budget
Date posted:
February 26, 2019
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The Kenya Revenue Authority ("KRA") is geared towards a function-based organization rather than one structured along the types of taxes. This is evidenced by the integration of VAT, Income Tax and Excise departments into the Domestic Department. Asses the likely benefits and drawbacks to KRA arising from this integration
Date posted:
February 26, 2019
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Fruit farm Ltd. produces pineapple juice for sale in both local and export markets. The company owns plantations in Sagan which supply pineapples to the processing factory located in Thika.
The following is a summary of the company’s income statement for the year ended 31 December 2006.
Required:
i) Capital allowances due to Fruit farm Ltd. for the year ended 31 December 2006
ii) Adjusted taxable profit or loss for the year to 31 December 2006.
Date posted:
February 26, 2019
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The following information relates to ABC Ltd. for the year ended 31 December 2006.
- Profit before tax sh. 4,000,000
- Import duty refunded by the authority sh. 400,000
- Dividend distributed by .ABC Ltd. sh. 8,800,000
- Dividend distributed by ABC Ltd. Sh. 3,000,000
- Corporation tax rate 30%.
Required:
Compensating tax payable by ABC Ltd. for the year ended 31 December 2006.
Date posted:
February 26, 2019
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The following information was extracted from the books of Faida Ltd. for the year ended 31 December 2006
- Profit before tax sh. 400,000
- Import duty refunded by tax authority sh. 400,000
- Dividend distributed by Faida Ltd. sh. 8,800,000.
- Dividend received by Faida Ltd. sh 3,000,000
The rate of corporation tax is 30%
Required:
Compensating tax payable by Faida Ltd. for the year ended 31 December 2006
Date posted:
February 26, 2019
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Two towns P and Q are 580km/hr apart.A bus left town P at 6.10a.m. and maintains an average speed of 90km/hr between P and Q. A car starts from Q at 8.00a.m. and travelled towards P at an average speed of 120km/hr.The car stopped for a total of 30 minutes on the way before meeting the bus.
(a)(i)How far from town P did they meet?
(ii)At what time did they meet?
(b)A rally driver starts from town Q towards town P at 9.30a.m.If he averages 180km/hr,calculate;
(i)The distance from Q when the rally driver overtook the car.
(ii)The time when the rally driver overtook the car.
Date posted:
February 25, 2019
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Primark Ltd. manufactures a variety of goods for the local market. The company commenced operations on 2 January 2006. The following is an extract from the company's balance sheet as at 31 December 2006
Required:
i) Capital allowances due to Primark Ltd. for the year ended 31 December 2007.
ii) Tax payable by the company (if any) for the year ended 31 December 2007.
Date posted:
February 25, 2019
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Describe the digestion process in fish.
Date posted:
February 25, 2019
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With an aid of a diagram describe the avian digestive system.
Date posted:
February 25, 2019
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Ann Mwajuma runs a small business in Kisii town. The revenue authority has asked her to submit a self assessment return for the year ended 31 December 2008
However, Ann Mwajuma did not maintain complete accounting records for the year ended 31 December 2008. She has therefore requested you to assist her and has provided you with the following information:
1. Opening and closing balances of assets and liabilities were as follows for the year ended 31 December 2008:
Date posted:
February 25, 2019
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Mr. Felix Madzeke is a citizen of Malawi but has been residing and conducting business in your country since 2005. However, he was not aware of the requirements to maintain proper records and submitting regular assessment to the revenue authority.
An inspection conducted by the revenue authority on his business and personal transactions over past four years revealed the following:
Assets and liabilities (business and personal) as at:
Date posted:
February 25, 2019
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Revelation Traders Ltd. started its operations on 1 January 2007. The following trial balance was extracted from the books of the company as at 31 December 2008:
Date posted:
February 25, 2019
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Briefly explain the procedure to be followed when an error on past returns is discovered either by the tax payer or commissioner for Domestic Taxes.
Date posted:
February 25, 2019
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Fahari Limited, a company making various leather products, commenced operation on 1 January 2009. The following information relate to the assets that the company purchased or constructed before commencement of operations
Date posted:
February 25, 2019
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How can corporates avoid taxes?
Date posted:
February 25, 2019
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Tax refunds and tax credits are increasingly being used by governments in the information and modernization taxation policies.
Required:
i) Citing examples distinguish between a tax refund” and a “tax credit”
ii) Evaluate the fundamental role of tax refunds and tax credits in a government’s developments agenda
Date posted:
February 25, 2019
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The following trial balance was extracted from the books of Nyaituya on
31st December 2005.
Additional information. Sh.
(i) Stock as at 31st December 2005 52,000
(ii) Rent accrued 6,000
(iii) Insurance paid in advance 4,000
(iv) Commission due 5,000
(v) Salaries owing 21,000
REQUIRED:
Prepare a trading, profit and loss account for the year ended 31st December
2005 and a balance sheet as at that date.
Date posted:
February 25, 2019
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Justify the imposition of shortfall tax on companies
Date posted:
February 25, 2019