Mawa Ltd incurred expenses of GH¢6,500.00 on repairs and improvement of Plant and Machinery and declared a profit of GH¢100,000.00 for the 2016 year of assessment. If the allowable amount for repairs and improvement expenses is GH¢4,000.00, what would be the excess amount of repairs and improvement for Mawuena Ltd? A. GH¢63,500.00 B. GH¢2,500.00 C. GH¢1,500.00 D. GH¢6,500.00 E. There is no excess amount.
Question
Mawa Ltd incurred expenses of GH¢6,500.00 on repairs and improvement of Plant and Machinery and declared a profit of GH¢100,000.00 for the 2016 year of assessment. If the allowable amount for repairs and improvement expenses is GH¢4,000.00, what would be the excess amount of repairs and improvement for Mawuena Ltd? A. GH¢63,500.00 B. GH¢2,500.00 C. GH¢1,500.00 D. GH¢6,500.00 E. There is no excess amount.
Solution
Mawa Ltd incurred expenses of GH¢6,500.00 on repairs and improvement of Plant and Machinery and declared a profit of GH¢100,000.00 for the 2016 year of assessment. If the allowable amount for repairs and improvement expenses is GH¢4,000.00, what would be the excess amount of repairs and improvement for Mawuena Ltd? A. GH¢63,500.00 B. GH¢2,500.00 C. GH¢1,500.00 D. GH¢6,500.00 E. There is no excess amount.
To find the excess amount of repairs and improvement for Mawa Ltd, we need to subtract the allowable amount from the total expenses.
Total expenses on repairs and improvement: GH¢6,500.00 Allowable amount for repairs and improvement: GH¢4,000.00
Excess amount = Total expenses - Allowable amount Excess amount = GH¢6,500.00 - GH¢4,000.00 Excess amount = GH¢2,500.00
Therefore, the excess amount of repairs and improvement for Mawa Ltd is GH¢2,500.00.
The correct answer is B. GH¢2,500.00.
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