Question

Maendeleo Ltd. is a manufacturing company operating through a number of branches in Kenya. The following information relates to Maendeleo Ltd.’s operations for the year ending 31 December 2020.

	Sh ‘000’	Sh ‘000’
Turnover		19,480.00
Cost of goods sold		5,620.00
Gross profit		13,860.00
Foreign exchange gain		148.00
Insurance recovery for stolen motor vehicle		968.00
Proceeds from sale of factory extension		469.00
		40,545.00
Less Expenses
Directors emoluments and staff costs	16,890.00
Pension contribution for staff	4,200.00
Staff recruitment cost	1,148.00
Purchase of furniture	420.00
Penalties on overdue VAT	164.00
Impairment loss of factory extension	150.00
Mortgage interest	364.00
Goodwill written off	162.00
Loan interest	1,286.00
Depreciation	908.00
General office expenses	1,348.00
		27,040.00

Additional information

1. Details of property, plants and equipment schedule reflected the following details for the assets that existed before the year ending 31^st December 2020:

Assets	Written Down Value 1 Jan 2020	Additions at Cost (2020)	Depreciation (2020)	Disposal Proceeds (2020)
	sh.	sh.	sh.	sh.
Computers	525,000.00	345,400.00	131,520.00	250,000.00
Water pump	-	280,000.00	56,000.00	-
Furniture	360,000.00	140,000.00	82,000.00	-
Conveyor belts	-	960,000.00	-	-
Delivery vans	2,500,000.00	142,000.00	180,000.00	620,000.00
Cash registers	620,000.00	-	58,000.00	-
Printers	120,000.00	60,000.00	42,000.00	-
Tractors	2,500,000.00	1,800,000.00	360,000.00	-
Motorcycles	380,000.00	-	68,000.00	-
Packaging machine	-	860,000.00	-	-
Non-processing machinery	960,000.00	-	62,000.00	-

2. A perimeter wall was constructed at cost of sh.960,000 during the year ending 31^st December 2020 used from 1^st March 2020
3. A go down and drainage system were constructed at cost sh.2,860,000 and sh.1,780,000 respectively put into use on 1^st April 2020.
4. The company constructed a borehole at cost of sh.1,500,000 during the year which was put in use on 1^st July 2020

Required

Capital allowance due to Maendeleo ltd for the year ending 31^st December 2020

Answer 1

Calculation of total Capital Allowances for the year 2020.

Assets	Written Down Value 1 Jan 2020	Additions at Cost (2020)	Depreciation (2020)	Disposal Proceeds (2020)
	sh.	sh.	sh.	sh.
Computers	525,000.00	3,45,400.00	1,31,520.00	2,50,000.00
Water pump	-	2,80,000.00	56,000.00	-
Furniture	360,000.00	1,40,000.00	82,000.00	-
Conveyor belts	-	9,60,000.00	-	-
Delivery vans	25,00,000.00	1,42,000.00	1,80,000.00	6,20,000.00
Cash registers	620,000.00	-	58,000.00	-
Printers	120,000.00	60,000.00	42,000.00	-
Tractors	25,00,000.00	18,00,000.00	3,60,000.00	-
Motorcycles	380,000.00	-	68,000.00	-
Packaging machine	-	860,000.00	-	-
Non-processing machinery	960,000.00	-	-	-
Total	6,71,520.00	8,70,000.00
Add: Allowance on Perimeter Wall = ( 960000X20%/365)X305	$    1,60,438.36
Add: Allowance on Drainage System = ( 28,60,000X20%/365)X305	$            4,77,972.60
Total Capital Alloawance	13,09,930.96
Note:	Capital Allowance will not be given for Non Processing Machinery
	Capital Allowance will not be given for Borehole