This scenario relates to three requirements.
Last-Orders Ltd ceased trading on 31 January 2017, having traded profitably for the previous ten years. The ordinary share capital of Last-Orders Ltd is owned 80% by Gastro Ltd and 20% by Gourmet Ltd.
Last-Orders Ltd’s summarised statement of profit or loss for the ten-month period ended 31 January 2017 is as follows:
| Note | £ |
| Revenue | | 176,790 |
| Operating expenses | | |
| Depreciation | | (9,460) |
| Employee costs | 1 | (142,400) |
| Lease of motor car | 2 | (1,600) |
| Other expenses | 3 | (299,810) |
| Operating loss | | (276,480) |
| Other income | | |
| Property business income | 4 | 11,500 |
| Profit on disposal of freehold office building | 5 | 47,400 |
| Loss before taxation | | (217,580) |
Note 1 – Employee costs are as follows:
| £ |
| Counselling services provided to employees who were made redundant | 5,200 |
| Pension contributions paid on behalf of employees | 12,200 |
| Employer class 1 national insurance contributions (NICs) | 11,890 |
| Employer class 1A NICs payable on benefits provided for employees | 1,160 |
| Employee bonuses declared but unpaid – these will not be paid during 2017 | 10,400 |
| Balance of expenditure (all allowable) | 101,550 |
| 142,400 |
Note 2 – Lease of motor car
The lease is in respect of a motor car with CO2 emissions of 120 grams per kilometre.
Note 3 – Other expenses are as follows:
| £ |
| Entertaining UK suppliers | 1,920 |
| Entertaining overseas customers | 440 |
| Qualifying charitable donation | 800 |
| Balance of expenditure (all allowable) | 296,650 |
| 299,810 |
Note 4 – Property business income
During the ten-month period ended 31 January 2017, Last-Orders Ltd let out a freehold office building. The following income and expenditure was received or incurred during the final 12 months of trading:
| Date received/(paid) | | £ |
| 1 February 2016 | Rent for the six months ended 31 July 2016 | 19,200 |
| 1 February 2016 | Insurance for the 12 months ended 31 January 2017 | (1,800) |
| 1 August 2016 | Rent for the six months ended 31 January 2017 | 19,200 |
| 21 November 2016 | Repairs following a fire (not covered by insurance) | (7,700) |
Note 5 – Profit on disposal of freehold office building
The office building was sold on 31 January 2017. The profit has been calculated as disposal proceeds of £126,800 less cost of £79,400. The indexation allowance is £12,900. The office building was never used for business purposes.
Additional information
Plant and machinery - On 1 April 2016, the tax written down value of Last-Orders Ltd’s main pool was £24,200. All of the items included in the main pool were sold for £13,600 on 31 January 2017, with none of the items sold for more than their original cost.
Last-Orders Ltd has previously always made up its accounts to 31 March.
Both Gastro Ltd and Gourmet Ltd are profitable and make up their accounts to 31 March.