Pleasant Place Plc is contemplating as to whether to invest in the Hotel or Tourism business. The Chairman of the Company has approached you this morning for assistance on the tax implications with respect to the two businesses for his final decision. The projected results of the two companies are likely to be the same in the first year. The companies’ projected income and expenditure for year 1 is as follows: ABS LTD (HOTEL) GHC Gross Profit 1,000,000 Expenditure 670,000 Additional Relevant Information: CDS LTD (TOURISM) GHC 1,000,000 670,000 A building to be bought on 1 March of Year 1 for GHC 400,000 has been granted full year’s depreciation at the rate of 20% and same amount has been added to the projected cost above. Required: As a postgraduate student in taxation at the Accra Business School, write a briefing note to advice the Chairman on what business to invest in, with the necessary appendix.

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 7P
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Pleasant Place Plc is contemplating as to whether to invest in the Hotel or Tourism business. The Chairman of the Company has approached you this morning for assistance on the tax implications with respect to the two businesses for his final decision.
The projected results of the two companies are likely to be the same in the first year. The companies’ projected income and expenditure for year 1 is as follows:
ABS LTD (HOTEL) GHC
Gross Profit 1,000,000
Expenditure 670,000
Additional Relevant Information:
CDS LTD (TOURISM) GHC
1,000,000
670,000
A building to be bought on 1 March of Year 1 for GHC 400,000 has been granted full year’s depreciation at the rate of 20% and same amount has been added to the projected cost above.
Required:
As a postgraduate student in taxation at the Accra Business School, write a briefing note to advice the Chairman on what business to invest in, with the necessary appendix.

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