TUTORIAL 4 – C5: INDUSTRIAL BUILDING ALLOWANCE
TUTORIAL QUESTION 1:
AAN Sdn Bhd (financial year-end 30 September), a manufacturing company, purchased a factory from SAF Sdn Bhd on 23 October 2010 and incurred expenditure as follows: | RM ‘000 | Purchase price (including land cost RM450,000) | 2,500 | Stamp duties | 50 | Legal fees | 15 | Total | 2,565 |
The SAF Sdn Bhd had used the factory for the purpose of its business up to 15 September 2010. The residual expenditure as at 31 December 2009 was RM1,020,500. The factory was constructed in 2009 at a cost of RM1,500,000. It was brought into use in November 2009 and capital allowances were claimed for each year.
AAN Sdn Bhd used the building as a factory immediately after purchased. On 23 October 2013 AAN Sdn Bhd transferred the factory to its wholly owned subsidiary, ASM Sdn Bhd (financial year-end 30 June) for RM1,200,000 (excluding land cost). The market value at the time of transfer has been RM1,500,000 for the building and RM500,000 for the land. ASM Sdn Bhd engaged in the business of hiring storage space to the public and the building was used as a warehouse for the purposes of its business.
REQUIRED:
i- Compute the qualifying building expenditure and industrial building allowances of AAN Sdn Bhd for the relevant years of assessment (Show all relevant computations).

ii- Determine the qualifying building expenditure and the industrial building allowance(s) of ASM Sdn Bhd for year of assessment 2014 (Show all relevant computations).

iii- Briefly explained two (2) implications of control transfer.

QUESTION 2:

(a) Explain how to determine the qualifying building expenditure for a constructed building and purchased building.

(b) Explain the reason/(s) for a company to claim industrial building allowance in a particular year of assessment.

QUESTION 3: