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Question 6a

Jump Ltd’s summarised statement of profit or loss for the three-month period ended 31 March 2015 is as follows:
Note££
Revenue264,900
Operating expenses
Depreciation8,100
Employee costs1189,700
Lease of motor car21,200
Professional fees37,800
Other expenses4202,800
(409600)
Operating loss(144700)
Bank interest receivable0
Loss before taxation
(144700)
Note 1 – Employee costs
Employee costs are as follows:£
Employee training courses3,400
Employee pension contributions paid11,600
Cost of annual staff party (for eight employees)1,500
Balance of expenditure (all allowable)173,200

189,700

Note 2 – Lease of motor car

The lease is in respect of a motor car with CO2 emissions of 189 grams per kilometre.

Note 3 – Professional fees

Professional fees are as follows:

£
Accountancy2,200
Legal fees in connection with the issue of share capital3,800
Legal fees in connection with the renewal of a 20-year property lease1,800

7,800

Note 4 – Other expenses

Other expenses are as follows:

£
Entertaining UK customers 1,700
Entertaining overseas customers 790
Political donations 800
Balance of expenditure (all allowable) 199,510

202,800

Additional information

Plant and machinery

On 1 January 2015, the tax written down values of Jump Ltd’s plant and machinery were as follows:

£
Main pool12,100
Special rate pool5,700
The following motor cars were sold during the three-month period ended 31 March 2015:
Date of saleProceedsOriginal cost
££
Motor car [1]7 January 20159,7009,300
Motor car [2]29 March 20156,10013,200

The original cost of motor car [1] was added to the special rate pool when it was purchased, and the original cost of motor car [2] was added to the main pool when it was purchased.

Required:
(a) Calculate Jump Ltd’s tax adjusted trading loss for the three-month period ended 31 March 2015.

Notes:

1. Your computation should commence with the operating loss figure of £144,700, and should list all of the items referred to in notes (1) to (4), indicating by the use of zero (0) any items which do not require
adjustment.

2. You should assume that the company claims the maximum available capital allowances. (10 marks)

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