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Taxation Law Accounting - Essay Example
Finance & Accounting
Pages 4 (1004 words)
Name: Professor: Course: Finance and Accounting Date: Quiz C Taxable income Taxable income is the total assessable income less deductions Taxable income = Assessable income - deductions Assessable income = Ordinary income + Statutory income Paper 1 Phillip’s total taxable income Phillip’s income $ $ Rent 55,000 5,000 60,000 Tennis racquet sales 500,000 Closing stock 100,000 Less Opening stock (56,000) 44,000 Total assessable income 604,000 Allowable deductions $ $ Repairs Air conditioner 2,000 Loan interest 5,000 Roof 2,000 Light fitting 500 9,500 Expenses Frames 150,000 Strings 100,000 Donations 10,000 Labor 75,000 Factory rent 30,000 Advertising 15,000 Wages 80,000 460,000 Total allowab…
The $5,000 received after the trading period qualify as income for the period ended 30 June 2010. This is in accordance with accruals accounting method; income is recognized when it is earned. All this is in accordance and requirements of section 6-5. The trading stock for Philip’s business has to be evaluated according to the general rule of accounting for stock-S70-35(1). The difference between the opening and closing stock is added to assessable income because the closing stock exceeds opening stock-S70-35(2). The allowable deductions (division 8) include the $2,000 which was an expense from the replacement of the air conditioner-S25-10. The amount is minimized to the cost that Phillip incurred since he resold the air conditioning system which generated back income-S6-5. ...
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