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Question 55- Crash Bash LTD – calculation of tax liability

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Question 55- Crash Bash LTD – calculation of tax liability

  • This topic has 4 replies, 3 voices, and was last updated 10 years ago by Tax Tutor.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • October 25, 2014 at 6:25 pm #205955
    mini
    Member
    • Topics: 38
    • Replies: 28
    • ☆☆

    Crash Bash LTD commenced trading on 1 February 2013
    Crash Bash LTD prepared its first accounts for the nine-month period ended 31 October 2013

    TTP = 338,510
    FII = 40,000
    Augmented profit = 378,510

    Question: Calculate corporation tax liability for the nine-month period ended 31 October 2013?

    According to the solution, the upper and lower limits are adjusted as following:
    Upper limit 1,500,000 * 9/12 *1/2 = 562,500
    Lower limit 300,000 * 9/12 *1/2 = 112,500

    Could you please explain to me why the upper and lower limits are multiplied by ½?

    October 25, 2014 at 8:39 pm #205969
    haymd1
    Member
    • Topics: 9
    • Replies: 26
    • ☆

    Because there would must be an associate company so the limits will be reduced read the question again

    October 25, 2014 at 10:56 pm #205978
    mini
    Member
    • Topics: 38
    • Replies: 28
    • ☆☆

    Thank you so much for your explanation. It all makes sense now.

    October 26, 2014 at 7:30 am #205998
    haymd1
    Member
    • Topics: 9
    • Replies: 26
    • ☆

    You are most welcome 🙂

    October 26, 2014 at 9:48 am #206056
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Correct – there must indeed be an associated company and hence divide the limits by 2.

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