AAT Level 4 Student in Need of Help!!

AAT Level 4 Student in Need of Help!!

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Hi everyone. Just wondering if someone could give me a little help, please. I am stuck on a question I've come across in my Business Tax studies, and I'm unsure at which point to calculate the Corporation Tax. The info is as follows: 

Profit and loss account

  2015   2014
  £   £
Retained profit ( loss ) at 01 November 2014 (30,665)   2,409
Profit ( loss ) for the year 70,410   (33,074)
Dividends paid 16,777   -
Retained profit ( loss ) at 31 October 2015 22,968   (30,665)
 

At which point do I calculate the CT for year ending 31 Oct 15? Do I deduct the loss from the previous year and then calculate the CT due i.e. 70,410 - 30,665? Or is it calculated on the full £70,410? If the latter, where does the loss get incorporated as relief?

Many thanks for your help.

Lisa

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By stephenkendrew
26th Feb 2016 17:22

£70,410

You should start the computation with the profit for the year of £70,410.

As far as the losses are concerned, it depends what happened to the losses in the computation for the previous year. If they were not used in some other way (set against other income or carried back to earlier years) they would have to have been carried forward. If so, the losses can be set against this year's profits.

Thanks (1)
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By CALBookkeeping
26th Feb 2016 18:04

Thank You

Thanks - as far as I can understand it the losses were carried forward, so assuming that this is the case in the scenario, would I start with the £70,410 within the computation, add Depreciation, less Capital Allowances, then subtract the Loss carried forward (£30,665), with CT due being 20% of the balance?

Many thanks.

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By cheekychappy
26th Feb 2016 21:31

Dividend and Retained Earnings
There might have been an illegal one.

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