Query : Q33 Saturn LTD, Kaplan Exam Kit

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Yasir
Member

Hi guys ! hope all doin great ahead of exams. Quick Question if anyone has done this question

Q : 33 Saturn LTD, Kaplan Exam Kit

Why, in the suggested answer, the 187,000 Loss of DD Ltd surrendered to Saturn Ltd when it saves 10,000 @ 26% only and remaining to RHEA Ltd to save 177,000 @ 27.5% !! IMO all should have been ideally surrendered to RHEA to maximise saving @ 27.5 !

Come on fellaas let me see how well prepared are you..Joking!. Thanks in advance. Cheers.

#108545

amanda7787
Participant

Because:
1) The limits are divided by 4, therefore the UL = 1500/4 = 375,000 and the LL = 300/4 = 75,000

2) Rhea is a large company so profits are taxed at 26%. So any loss surrendered to Rhea Ltd will save tax at 26%.

3) Saturn is also a large company, however the first £10,000 will save tax at 26% and the remainder – at 27.5%.

Hope this helps.

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