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Interest payable – corporation tax liability

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Interest payable – corporation tax liability

  • This topic has 5 replies, 4 voices, and was last updated 6 years ago by Tax Tutor.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 29, 2016 at 1:01 pm #317923
    Kamila
    Member
    • Topics: 16
    • Replies: 10
    • ☆

    During the year ended 31 March 2011 Molten-Metal plc paid loan stock interest of £22,500. Loan stock interest of £3,700 was accrued at 31 March 2011, with the corresponding accrual at 1 April 2010 being £4,200. The loan is used for trading purposes .

    The answer for this is 22500 + 3700 – 4200 = 22000 .

    Could you please explain why 4200 is being deducted here.. thanks

    May 31, 2016 at 6:34 am #318255
    samh
    Member
    • Topics: 15
    • Replies: 42
    • ☆☆

    I think it’s because the loan is for trading process, then the interest paid accrued at1April 2010 should be deducted from trading profit instead of interest income…

    May 31, 2016 at 6:36 am #318256
    samh
    Member
    • Topics: 15
    • Replies: 42
    • ☆☆

    About receivable.
    Loan interest receivable £32800. Accrued @1April 2014 £10600, accrued @31March 2015 £11300. This two figures are ignored. Why’s?

    May 31, 2016 at 11:21 am #318365
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    As per your question the basis of the deduction is interest PAYABLE and this is simply the calculation of the amount payable in respect of the accounting period – you should have learned the accruals concept in basic accounting!!
    Paid + closing accrual – opening accrual (this would have been included last year but is a part of what was paid this year so must now be removed)

    June 1, 2016 at 9:14 pm #318739
    hemraj123
    Member
    • Topics: 110
    • Replies: 189
    • ☆☆☆

    Sir, While calculating property business profit for corporation, if a property is let out furnished, then is wear and tear allowance deducted from property income?

    June 3, 2016 at 8:13 am #319037
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Yes companies will also get the wear and tear allowance but remember that it is only on residential property

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