The MC question is as shown below: 9. Which of the following would NOT be removed from the calculation of a UK company’s accounting profits in order to arrive at the taxable profit for corporation tax purposes? A Overseas earnings. B Franked investment income. C Depreciation. D Entertaining costs and similar expenses that are not allowable for tax. Why should the correct answer be A instead of D? Thanks.
D is correct because that are not allowable for tax. A is not because Overseas earnings are taxable, litations though
Items B, C and D are all constituents of a company's profits but are treated differently for tax B - franked investment income - already taxed, so not taxed again C - depreciation - not allowable against tax (so added back in) D - these type of expenses also not allowable against tax (so added back in) Overseas profits are taxable (although double taxation relief rules may apply)
D is not correct as the question states "Which of the following would NOT be removed from the calculation of a UK company’s accounting profits". A company's accounting profits has already had these items removed, so need to be added back.
