4 (a) Company Z, a TV trader and general value added tax (VAT) payer, had the following transactions in the month
of April 2008:
1. Sold used machinery, with an original cost of RMB 10,000, for RMB 80,000.
2. Sold a used car, with an original cost RMB 60,000, for RMB 8,000.
3. Sold scrap for RMB 10,000.
4. Sold 100 TV sets for RMB 1,200 each. The company had purchased the TV sets for RMB 1,000 each.
5. Purchased used materials for recycling with an ordinary invoice for RMB 10,000.
6. Paid electricity charges of RMB 5,000.
All of the above amounts are stated excluding VAT.
Required:
Calculate the value added tax (VAT) payable by Company Z for the month of April 2008. (10 marks)
(b) Company K is a manufacturing foreign invested enterprise which commenced business two years ago. It has an
accounting policy of making a general provision for obsolescence equal to 3% of its year end stock balance.
Details of the movements in this provision for the two years since the commencement of Company K’s business
are as follows:
Year 1 Year 2
RMB RMB
Year end stock balance 100,000 800,000
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Movement on account of the stock provision:
Opening balance 0 30,000
(1) General provision for the year 30,000 –
(2) Amount written off – (1,000)
(3) Amount written back – (5,000)
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Closing balance 30,000 24,000
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Required:
Briefly explain the tax treatment of the items identified as (1), (2) and (3) comprising the movements in the
provision in years 1 and 2. (5 marks)
(15 marks) 4 (a) Company Z – value added tax (VAT) for the month of April 2008
(1) Output VAT for used machinery: (80,000/1·04) x 4% x 50% = RMB 1,538 2·0
(2) Sales proceeds for the used car are less than the original cost, therefore, exempt 1·0
(3) Output VAT for scrap: 10,000/1·17 x 17% = RMB 1,453 1·0
(4) Output VAT for TV: 1,200 x 100 x 17% = RMB 20,400 1·0
Input VAT for TV: 1,000 x 100 x 17% = RMB 17,000 1·0
(5) Input VAT for used materials: 10,000 x 10% = RMB 1,000 2·0
(6) Input VAT for electricty: 5,000 x 17% = RMB 850 1·0
VAT payable for the month: (1,538 + 1,453 + 20,400 – 17,000 – 1,000 – 850) = RMB 4,541 1·0
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10
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(b) (1) The general provision is not tax allowable and RMB 30,000 should be added back to the accounting
profit of year one. 1·0 Marks
(2) A specific stock write off will be allowable if the write off is incurred in the course of business with the
tax bureau’s approval. 2·0
(3) Given that the provision of RMB 30,000 was added back in calculating the taxable profit in year one,
the write back RMB 5,000 should not be treated as taxable income in year two. 2·0
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5·0
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15
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发表于 2008-10-11 14:15
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