Identify the following in to “Allowed”, “Disallowed” or “Partially Allowed” business expenses. For business tax purpose 20% provident fund contribution by the company name 10% provident fund contribution by the employee 15% provident fund contribution by the company name Basic salary of the General Manager of NMS p.l.c is br4,500 and his representation allowance is birr 900. General provision on doubtful debtors Company motor vehicle with net book value of Birr 250,000.00 was completely destroyed with car accident. The motor vehicle was insured and Birr 200,000.00 was recovered from the insurance company Br 100,000 donation to indigenous NGO to be utilized for anti-HIV campaign. Br 25,000. spending on public relations relating to the promotion of company’s business activity Br 25,000 spending as entertainment

Question

Answered

Verified Answer :

peerjahan99 peerjahan99 · Answer 1 · 2024-06-02T12:42:45-04:00

Answer:

Here's how each expense would typically be classified for business tax purposes:

1. 20% provident fund contribution by the company: Allowed

2. 10% provident fund contribution by the employee: Allowed

3. 15% provident fund contribution by the company: Allowed

4. Basic salary of the General Manager of NMS p.l.c: Allowed

5. Representation allowance for the General Manager: Allowed

6. General provision on doubtful debtors: Allowed

7. Company motor vehicle completely destroyed: Partially Allowed (deductible up to the net book value minus insurance recovery)

8. Donation to indigenous NGO for anti-HIV campaign: Allowed (usually deductible as a charitable contribution)

9. Spending on public relations: Allowed

10. Spending on entertainment: Disallowed (generally not deductible for tax purposes)