You have been invited by a group of CPA I and CPS I students to discuss the matters
listed below:
Required:
In each of the cases provide explanatory notes and computations for use in your
discussions with students.
(a) (i) A manager who is on full-time employment where he draws sh.80,000
per month. He is
housed by the employer in a rented house where rent payable to the
landlord is Sh.720,000 per annum.
( 4 marks)
(ii) The manager makes an annual contribution of Sh.84,000 to a registered
pension fund.
( 3 marks)
(iii) The manager is provided with a motor car whose purchase cost was
Sh.1,200,000.
( 3 marks)
(b) A high school boy aged 15 years inherits Sh.300,000 from his grandfather and
wins Sh.100,000 in the national lottery.
( 4 marks)
(c) A retired civil servant on an annual pension of Sh.180,000 per annum signed a
service contract with effect from 1 January 2005. The contract was for three
years at an annual salary of Sh.440,000. The contract was terminated by the
employer on 31 December 2005. The employee was paid compensation
amounting to Sh.560,000. ( 6 marks)