CAP2-TXR-SCH-S’13 1 10/06/2013

CA Proficiency 2

PAPER 4 – TAXATION II REPUBLIC OF IRELAND

SUMMER 2013 (Tuesday 25th June 2013 - 9.30 a.m. to 1.20 p.m.)

SCHEDULE TO SECTION A

CAP2-TXR-SCH-S’13 2 10/06/2013

SCHEDULE I

Giant Gyms Limited

Income Statement for the Year Ended 31 December 2012

Note

€ €

Turnover

5,852,750

Cost of sales

4,124,630

Gross profit

1,728,120

Administration expenses

Depreciation

43,000 Repairs and maintenance 1

14,880

Bad debts 2

4,200 Audit fees

8,750

Taxation fees 3

2,825 Rent & rates

7,000

Sundry expenses 4

9,875 Bank charges

1,165

Property insurance

5,500 Client entertaining

8,500

Telephone & fax

3,455 Wages & salaries 5

939,875

Legal & professional fees 6

36,540 Loss on disposal of fixed assets 7

3,875

(1,089,440)

Other income

Interest on overpaid corporation tax

820 Dividends received 8

25,000

25,820

Net interest payable and similar expenses

Bank loan interest payable 9

(5,415)

Profit / (Loss) before tax

659,085

CAP2-TXR-SCH-S’13 3 10/06/2013

SCHEDULE I (Cont’d)

NOTES TO THE INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012 1. Repairs and maintenance includes € 4,995 for new signage for three new gyms that GIANT

opened during 2012. It also includes € 2,390 for repairs to the roof of GIANT’s flagship gym in Dublin.

2. Bad debts is comprised of the following:

€ Bad debts written off 3,200 Decrease in general provision for bad debts (1,400) Increase in specific provision for bad debts 4,750 Bad debts recovered (2,350) 4,200

3. Taxation fees relate to due diligence advice received by GIANT in relation to the takeover of Tiny

Gyms Limited (“TINY”). GIANT acquired a 10% interest in TINY in 2012 through the acquisition of ordinary share capital. Zach Zucker is also a director of TINY.

4. The following amounts are included within sundry expenses: € Donations to political party 2,000 Opening parties for new gyms* 1,085 *The gym opening parties allow potential new members to see the facilities that GIANT has to offer and the amount represents food and drink at the parties.

5. Wages and salaries include € 53,000 paid into GIANT’s Revenue approved pension scheme.

The pension contributions paid in 2012 include ordinary annual contributions of € 21,200 and special contributions of € 31,800.

6. Legal & professional fees include the following fees: € Legal fees re defending a claim for unfair dismissal by a former employee 2,280 Legal fees re purchase agreement of TINY (see note 3 above) 9,650 Legal fees re extension to property 2,100

7. GIANT sold a car during 2012, incurring a loss on disposal of € 3,875.

8. GIANT received a dividend from its investment in ordinary shares of Gym Accessories AG, a

German incorporated and resident trading company, on 1 October 2012. The dividend was paid from the trading profits of Gym Accessories AG.

9. The bank loan interest was paid on a loan to finance the acquisition of TINY (see note 3 above).

10. Capital allowances for the year ended 31 December 2012 are € 27,000, including the balancing allowance arising on the car sold (see note 7 above) during 2012.