Reference no: EM132946876

Question - Line Sdn Bhd (LSB), a resident manufacturing company located in Bangi Industrial Park, Selangor since year 2005. In year 2013, the company embarks on a joint-venture business to produce promoted product and granted with pioneer status. The company in the year 2018 expanded its business by constructing new factory building which attached to the existing factory building. With the new business capacity, the production was increased by 60%. Relevant information pertaining to the company is as follows:

	2018 RM'000	2019 RM'000	2020 RM'000
Adjusted income/(loss)	150,000	220,000	450,000
Capital allowances	65,000	58,000	44,000
Interest income	5,000	7,000	9,000
Approved donations	1,000	500	1,500

Capital expenditure (Note) Construction of factory building 10,500 - Hi- tech machinery 16,000 8,500 11,200 Motor vehicles - 180 - Office equipment - 500 700 2 Note: The capital expenditures were incurred in relation to the business expansion program.

Required -

i. Determine whether LSB is eligible to apply for reinvestment allowance under Schedule 7A, Income Tax Act 1967 (as amended).

ii. Compute the chargeable income and amount to be credited to exempt income account for the new investment incentive in the year 2018 to 2020.