GoMo Ltd is a UK registered company which commenced trading in the UK on 1 March 2020 as a manufacturer of mopeds (small motorbikes). GoMo Ltd prepared its first accounts for the period 1 March 2020 to 31 December 2020. The following information is available:B6) Calculate the capital gains tax Mr Smith will owe to HMRC following the incorporation of ‘MoFin Ltd’ in the tax year 2020/21.Your answer should take into consideration any incorporation and business asset disposal (entrepreneur’s) relief which are available to Mr Smith. Vii.MoFin LTDOn 10 November 2020, GoMo Ltd purchased 80% (800 shares) of the issued sharecapital in a new UK company called 'MoFin Ltd'. GoMo Ltd paid £160,000 for the issuedshare capital.'MoFin" was originally run as a sole-trade by Mr Smith. On 10 November 2020, Mr Smithtransferred the business assets in to a newly incorporated company 'MoFin Ltd', in returnhe received £160,000 cash and a 20% shareholding in the company (200 shares).The market value of the net assets Mr Smith transferred to 'MoFin Ltd' on incorporationwas:Internally generatedgoodwillFreehold office*DebtorsCreditors60,000127,00025,000Market Value £Total net assests200,000*The freehold office was brought March 2011 for £50,000 Mr Smith, (who is 63 and a higher rate taxpayer), remains involved with the business as apart-time director of MoFin Ltd.

The profit that one earns on the sale of asset like bonds, stocks, or the real estate. It also…

Answered: Vii.MoFin LTD On 10 November 2020, GoMo…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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GoMo Ltd is a UK registered company which commenced trading in the UK on 1 March 2020 as a manufacturer of mopeds (small motorbikes). GoMo Ltd prepared its first accounts for the period 1 March 2020 to 31 December 2020. The following information is available:

B6) Calculate the capital gains tax Mr Smith will owe to HMRC following the incorporation of ‘MoFin Ltd’ in the tax year 2020/21.

Your answer should take into consideration any incorporation and business asset disposal (entrepreneur’s) relief which are available to Mr Smith.

Vii.MoFin LTD
On 10 November 2020, GoMo Ltd purchased 80% (800 shares) of the issued share
capital in a new UK company called 'MoFin Ltd'. GoMo Ltd paid £160,000 for the issued
share capital.
'MoFin" was originally run as a sole-trade by Mr Smith. On 10 November 2020, Mr Smith
transferred the business assets in to a newly incorporated company 'MoFin Ltd', in return
he received £160,000 cash and a 20% shareholding in the company (200 shares).
The market value of the net assets Mr Smith transferred to 'MoFin Ltd' on incorporation
was:
Internally generated
goodwill
Freehold office*
Debtors
Creditors
60,000
127,000
25,000
Market Value £
Total net assests
200,000
*The freehold office was brought March 2011 for £50,000

Mr Smith, (who is 63 and a higher rate taxpayer), remains involved with the business as a
part-time director of MoFin Ltd.

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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