Compute industrial building allowances and balancing charges

Assignment Help Accounting Basics

Reference no: EM132749738

Question - BestAward Sdn Bhd (BASB) is in the business of manufacturing papers. BASB prepares its accounts to 31 July annually. The company has incurred the following expenditure for the purpose of its business.

(i) The company constructed a building at a cost of RM2,090,000. The building was used as a factory in May 2016. The details of the expenditure incurred are as follows:

Expenditure RM

Cost of land 950,000

Legal fee for land acquisition 75,000

Architect's fees 35,000

Construction cost 400,000

Electrical wiring and plumbing 60,000

Fencing 20,000

Site preparation cost to install the plant 200,000

Cost of plant 350,000

Total 2,090,000

(ii) In the year of assessment 2016, the company also bought a building costing RM750.000. The total built-up area of this building was 450,000 sq. feet. The building has been used for the following purposes:

Living accommodation for factory workers 88%

Administration office 6%

Meeting rooms 6%

(iii) A new building was bought and put into use as a warehouse for the storage of raw materials on 30 April 2017. The cost of the building was RM620,000. It was located within the factory compound. Due to financial problem, the building was sold to JukeBook Sdn Bhd (accounting year end 30 September) for RM760.000 on 6 June 2018. JukeBook Sdn Bhd used the whole building as a factory.

Required - Compute the industrial building allowances and balancing charges, if any, for both companies for all the relevant years of assessment up to year of assessment 2018.

Reference no: EM132749738

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