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Hi tax tutor, have just attempted the above question however I thought that the expense of “contribution to local enterprise agency” included within the miscellaneous expenses should be classed as a qualifying charitable donation and therefore I adjusted for this figure, however the answer has not. If I see a charitable donation on the income statement should I be adjusting for this or will the qualifying charitable donation figure be given in the question and I simply need to deduct this from total adjusted profits? Thank you in advance.
I take your point that IF you were dealing with a CHARITABLE donation then you would add back in the adjustment of profits UNLESS the donation was small and local and for the benefit of the business in which case it would be treated as an allowable trading expense.
In this case a contribution to a local enterprise agency would be specifically treated as an allowable trading expense
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