TOPIC 1: BASIS PERIOD

ACTIVITY 1

Waca Sdn Bhd commenced business on 1 February 2018 and made up its first set of accounts
to 30 April 2019 and subsequently to 30 April. After two years of operation, the board of
directors decided to change its accounting year end to 30 November for its own convenience,
as follows:

Accounting Period Adjusted Income/ (Loss)

RM
1/02/2018 - 30/04/2019 10,000
1/05/2019 - 30/04/2020 15,000
1/05/2020- 30/11/2020 (5,000)
1/12/2020 - 30/11/2021 18,000
1/12/2021 - 30/11/2022 6,000

Required:

i. Determine the basis periods and the adjusted income/(loss) for the relevant years of
assessment.
(6 marks)

ii. Briefly explain the meaning of "failure year" and its tax implication.
(2 marks)
(Total: 8 marks)
ANSWER
(i)

YA Basis Period Adjusted lncome / (Loss)

RM
2019 1/02/2018 - 30/04/2019 10,000

2020 1/05/2019 - 30/04/2020 15,000

2021 1/05/2020 - 30/11/2021 (5,000) + 18,000 = 13,000

2022 1/12/2021 - 30/11/2022 6,000

(ii)

Failure year means the year in which there is failure by a business entity to close its accounts to
the normal accounting date.

When there is a failure year, it means there is a change in AP which in effect might have an impact
on the BP. Hence, the adjusted income will either ne increased, decreased or no changes
depending the impact on its BP.
 TUTORIAL QUESTION 1
A. Wira Cool Sdn Bhd commenced its business on 1 July 2016 and closed its first account
on 30 April 2017 and to 30 April thereafter. In May 2018, the company decided to
change its accounting date to 31 December each year as follow:

B
M
@
Accounting Period Adjusted income/(loss)
RM

B
1 July 2016 – 30 April 2017 90,000

M
@
1 May 2017 – 30 April 2018 120,000
1 May 2018 – 31 December 2018 (13,000)

B
1 January 2019 – 31 December 2019 140,000

M
@
However, on 1 January 2020, the company changed its accounting year end to

B
M
31 May annually as follow:

@
Accounting Period Adjusted income/(loss)

B
M
RM

@
1 January 2020 – 31 May 2021 170,000
1 June 2021 – 31 May 2022 280,000

B
M
@
Required:
B
M
a. Determine the basis period and the adjusted income/(loss) of Wira Cool Sdn
@

Bhd for all the relevant years of assessment.

(6 marks)
B
M
@

b. Discuss the tax treatment for a basis period and adjusted income in a failure
yearif a company changes its new accounting period to be ended in the third year
B
M

fromthe last account.

@

(2 marks)
(Total: 8 marks)
B
M
@
B
M

END OF QUESTIONS
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B
M
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B
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B
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B
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B
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 TUTORIAL QUESTION 2
A. Topcrop Sdn Bhd, a plantation company was incorporated in Malaysia in 2018. The
company commenced its business on 1 April 2018 and closed its first account on 31
October 2018 and 31 October in the subsequent years. In 2020, the company decided

B
to change its accounting period to end on 31 March 2020 due to a merging activity

M
@
with Acradic Sdn Bhd for diversification of products. However, in 2021 the company
had to change again its accounting period to end on 31 December 2021 as per

B
agreement withthe new board of directors.

M
@
The adjusted income/(losses) for the respective accounting periods are as follow:

B
M
@
Accounting Period Adjusted Income/(Losses)
(RM)

B
1 April 2018 – 31 October 2018 56,000

M
@
1 November 2018 – 31 October 2019 70,000
1 November 2019 – 31 March 2020 45,000

B
1 April 2020 – 31 March 2021 50,000

M
@
1 April 2021 – 31 December 2021 (35,000)
1 January 2022 – 31 December 2022 105,000

B
M
@
Required:
B
M
a. Determine the basis period and the adjusted income/(loss) of Topcrop Sdn
@

Bhdfor all the relevant years of assessment.

(6 marks)
B
M
@

b. Explain briefly the responsibilities of a company related to the change of

theaccounting year-end.
B
M

(2 marks)
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(Total: 8 marks)
B
M
@
B
M

END OF QUESTIONS
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B
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B
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B
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B
M
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B
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 TUTORIAL QUESTION 3
A. Deli Frozen Sdn Bhd commenced business on 1 November 2017 and closed its first set
of accounts on 31 August 2018 and to that date for subsequent years. On 1 July 2020,
the company decided to change its accounting year end to 31 January and the accounts

B
were prepared on 31 January 2021 and thereafter. The adjusted income/(losses) for the

M
@
respective accounting period is as follows:

B
Accounting Period Adjusted income/(loss)

M
@
RM
1 November 2017 – 31 August 2018 80,000

B
1 September 2018 – 31 August 2019 (23,000)

M
@
1 September 2019 – 31 January 2021 102,000
1 February 2021 – 31 January 2022 195,000

B
M
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Required:

B
M
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a. Illustrate the basis period and the adjusted income/(loss) of Deli Frozen Sdn Bhd
for all the relevant years of assessment.

B
M
(5 marks)

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b. Describe TWO (2) situations where the new accounting period will be accepted as
B
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the new basis period for a year of assessment when there is a change in the
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accounting period.
(2 marks)
B
M

(Total: 7 marks)
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END OF QUESTIONS
B
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TUTORIAL QUESTION 4
B
M

A. DiNEX Sdn Bhd commenced its operation on 1 April 2017 and prepared its first and
@

subsequent sets of accounts to 30 June. On 1 July 2020, the company decided to

change its accounting year to 28 February 2022. The adjusted income / (loss) for the
B
M

relevant financial accounting periods are as follows:

@

Accounting Period Adjusted income/(loss)

B
M

RM
@

1 April 2017 – 30 June 2018 (50,000)

1 July 2018 – 30 June 2019 20,000
B
M

1 July 2019 – 30 June 2020 (85,000)

@

1 July 2020 – 28 February 2022 (24,000)

B
M
@

Required:
a. Determine the basis period and the adjusted income/(loss) of DiNEX Sdn Bhd
B

forall the relevant years of assessment.

M
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(5 marks)
B

b. Explain the tax treatment on revenue expenses incurred prior to the

M
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commencement date of the business.

(2 marks)
(Total: 7 marks)
END OF QUESTIONS