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The City Limited : Income statement for the period ended 31 January 2023

Sales 7,770,000

Less: Cost of sales (5,268,00)

Gross Trading Profit 2,502,000

Other income:

Dividend income 108,000

Interest 17,000

Profit on sale 180,000

305,000

Operating costs:

Remuneration 850,000

Royalties 100,000

Miscellaneous expenses 1,165,000

Repairs and renewals 120,000

Loss on asset disposal 65,000

Depreciation 270,000

(2,570,000)

Finance costs Interest (35,000)

Profit before tax 202,000

2.1- On the basis of the information provided, for the accounting period ended 31 January 2023:

Using the information provided in points 3 and 8; calculate the net chargeable gain arising on the disposal of the freehold warehouse and shares in The City Limited, on the basis that any reliefs available are claimed.

3. On 25 April 2022 The City received proceeds of 250,000 for the sale of a warehouse which had been used for trading purposes. The original warehouse cost 25,000 when it was first acquired in December 1978 and was valued at 55,000 in March 1982. The sale was due to the company downsizing and The City bought a smaller replacement warehouse in October 2021 for 200,000.

8. On 10 March 2022 The City sold its 100% investment in Lisbonnete Limited for 20,000. The expenses associated with the sale amounted to 5,000 and the original cost of the shares (in July 1992) was 80,000. Lisbonnete Limited was an active trading company throughout the period that it was owned by The City Limited.

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