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Question 4 QN Ltd was a mining company based in Australia. Because of financial...

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Accounting

Question 4
QN Ltd was a mining company based in Australia. Because of financial difficulties it ceased operations and went into liquidation.
During the year before its liquidation QN Ltd made the following payments:
1. A sum of $10,000,000 given to a political party.
2. A payment to the company solicitors of $50,000 to defend action against the company for breaching Environmental Protection issues.
3. The company was eventually fined $75,000 for the above breaches.
4. A salary of $125,000 to the wife of the Managing Director of the company for acting as the bookkeeper. His wife is not a qualified accountant and only spends 1 hour a day in the office. A reasonable salary for this role based on the hours worked would be $28,000.
5. A claim for faulty products that was paid after the company ceased operations of $958,000
REQUIRED: Advise the company whether the above amounts are allowable deductions. In your answer you must refer to relevant case law and legislation.

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