Life Oil Sdn Bhd (LOSB) is a small oil palm plantation company, it was incorporated in year 2010 and it purhcased a piece of agricultural land in Sarawak at the cost of RM9 million in the same year. LOSB then spent RM8,000 for the preparation of the land including tree felling, drains and road constuctions, seedling, etc. Thereafter, RM6,000 per year was spent for the upkeep and ferterlizing of the estate. No harvesting could be carried out during the first three (3) years, therefore, no income was generated during that period. starting from the fourth year, a harvesting cost of RM2,500 was incurred every year to harvest the fresh fruit bunch of the oil palm. In the year 2012, LOSB consturcted an office building and living quarters for its workers. In the year 2021, all the doors in the office building and the living quarters have been damaged due to wear and tear, LOSB replaced all of them using a sturdier material so that less replacement will be needed in the future. In the year 2017, LOSB applied for subdivision of its land into ten (10) parcels, and was approved in year 2019, In the year 2021, another plantation company started planting pineapple on the land adjacent to LOSB's estate and frequently disputed with LOSB regarding the waste disposal on the border of the land with LOSB's estate. As a result, LOSB decided to sell that particular parcel to the pineapple plantation company. This is the only sale of land that LOSB carried out. Explain, using badges of trade, whether the proceeds from selling the parcel of land to the pineapple plantation company is capital or revenue in nature
Life Oil Sdn Bhd (LOSB) is a small oil palm plantation company, it was incorporated in year 2010 and it purhcased a piece of agricultural land in Sarawak at the cost of RM9 million in the same year. LOSB then spent RM8,000 for the preparation of the land including tree felling, drains and road constuctions, seedling, etc. Thereafter, RM6,000 per year was spent for the upkeep and ferterlizing of the estate. No harvesting could be carried out during the first three (3) years, therefore, no income was generated during that period. starting from the fourth year, a harvesting cost of RM2,500 was incurred every year to harvest the fresh fruit bunch of the oil palm.
In the year 2012, LOSB consturcted an office building and living quarters for its workers. In the year 2021, all the doors in the office building and the living quarters have been damaged due to wear and tear, LOSB replaced all of them using a sturdier material so that less replacement will be needed in the future.
In the year 2017, LOSB applied for subdivision of its land into ten (10) parcels, and was approved in year 2019, In the year 2021, another plantation company started planting pineapple on the land adjacent to LOSB's estate and frequently disputed with LOSB regarding the waste disposal on the border of the land with LOSB's estate. As a result, LOSB decided to sell that particular parcel to the pineapple plantation company. This is the only sale of land that LOSB carried out.
Explain, using badges of trade, whether the proceeds from selling the parcel of land to the pineapple plantation company is capital or revenue in nature.
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