ACCT3161_ass3_1011_2nd - $ Gross profit 8,576,000 Dividend...

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THE CHINESE UNIVERSITY OF HONG KONG School of Accountancy ACCT 3161 – Taxation (2 nd Term, 2010-2011) Assignment 3 Due Date: March 29, 2011 (Tuesday), 2011 4:00 pm Question 1 FB Ltd, a Hong Kong company, is responsible for the supply of raw materials and machinery and to provide technical and managerial know-how to a Mainland processing enterprise. The Mainland processing enterprise is responsible for the provision of factory premises, utilities and labour force. In return for the processing service, FB Ltd pays a subcontracting charge to the Mainland enterprise. (a) Name the processing arrangement in this case. (b) Distinguish between "contract processing" and "import processing". (c) What are the tax treatments of income under "contract processing" and "import processing"? Question 2 RS Ltd is a wholesaler of stationery in Hong Kong. It makes up its accounts to 31 March annually. Its statement of comprehensive income for the year ended 31 March 2010 showed the following income:
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Unformatted text preview: $ Gross profit 8,576,000 Dividend (Note a) 30,000 Rental income (Note b) 240,000 Compensation received (Note c) 70,000 Bank interest (Note d) 134,000 Exchange gain (Note e) 15,000 Profit on sale of fixed assets (Note f) 3,000 Notes: (a) Dividend from the company's subsidiary in Hong Kong. (b) Property A in Hong Kong 180,000 Property B in Mainland China 60,000 240,000 (c) Compensation for loss of motor vehicles 50,000 Compensation for loss of trading stock 20,000 70,000 (d) Interest on the company's fixed deposit with a bank in Hong Kong 80,000 Interest paid by overseas customers on overdue accounts 54,000 134,000 (e) This was arising from the settlement of trade debts with the overseas suppliers. (f) The income represents profits on sale of office equipment. Explain the tax treatments of the income of RS Ltd. ***END*** Data file: ch/ ACCT3161_ass3_1011_2nd Page 1...
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This note was uploaded on 02/04/2012 for the course ACCT 3161 taught by Professor Kwong during the Spring '11 term at CUHK.

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