1 Thai Curry Ltd is a manufacturer of ready to cook food. The following information is ava
ilable in respect of the year
ended 30 September 2005:
Trading loss
The trading loss is £32,800. This figure is before taking account of capital allowances.
The equipment sold on 1 November 2004 for £12,800 originally cost £27,400. Motor car (2), purchased on
19 May 2005, is a low emission motor car (CO2 emission rate of less than 120 grams per kilometre).
The cost of the new freehold office building purchased on 20 September 2005 included £8,500 for the central
heating system, £7,200 for sprinkler equipment and the fire alarm system, £10,700 for the electrical and lighting
systems, and £7,050 for the ventilation system.
Thai Curry Ltd is a small company as defined by the Companies Acts.
Industrial building
On 1 October 2004 Thai Curry Ltd purchased a second-hand factory for £360,000 (excluding the cost of land). The
factory was originally constructed at a cost of £300,000 (excluding the cost of land), and was first brought into use
for industrial purposes on 1 October 1999. The factory was not used for industrial purposes during the period
1 October 2001 to 31 March 2003, but returned to industrial use from 1 April 2003 until the date of sale. The
previous owner of the factory prepared accounts to 31 March.
Income from property
Thai Curry Ltd lets out two warehouses that are surplus to requirements.
The first warehouse was let from 1 October 2004 until 31 May 2005 at a monthly rent of £2,200. On that date the
tenant left owing two months rent which Thai Curry Ltd was not able to recover. During August 2005 £8,800 was
spent on painting the warehouse. The warehouse was not re-let until 1 October 2005.
The second warehouse was empty from 1 October 2004 until 31 January 2005, but was let from 1 February 2005.
On that date Thai Curry Ltd received a premium of £60,000 for the grant of a four-year lease, and the annual rent of
£18,000 which is payable in advance.
Loan interest received
Loan interest of £8,000 was received on 30 June 2005, and £3,500 was accrued at 30 September 2005. The loan
was made for non-trading purposes.
Dividends received
During the year ended 30 September 2005 Thai Curry Ltd received dividends of £36,000 from African Spice plc, an
unconnected UK company. This figure was the actual cash amount received.
Profit on disposal of shares
On 28 July 2005 Thai Curry Ltd sold 10,000 £1 ordinary shares in African Spice plc, making a capital gain of
£155,300 on the disposal.
Other information
Thai Curry Ltd has three associated companies.
Required:
(a) Calculate Thai Curry Ltd’s tax adjusted trading loss for the year ended 30 September 2005. You should
assume that the company claims the maximum available capital allowances. (14 marks)