IN JANUARY 2012, TUESDAY SRL INTENDED TO CONTRACT A LOAN OF 420,000...

5. In January 2012, Tuesday SRL intended to contract a loan of 420,000 lei (or €100,000 if it is denominated ineuro) for four months to finance its working capital. Tuesday SRL had researched two possible sources for thisloan. Firstly, to take a loan from a bank which would be denominated in lei and at an interest rate of 8%;secondly, to take a loan from Week Ltd which would be denominated in euro and at an interest rate of 7%.Required:(a) State the general rules to determine when the tax year starts and finishes, explain whether Tuesday SRL willhave one or more tax years, and state the dates on which each of Tuesday SRL’s tax year(s) start and finish.(3 marks)(b) (i) Explain the thin capitalisation rules according to Romania’s tax legislation; and (6 marks)(ii) Compute Tuesday SRL’s accounting interest expense and the deductible value of interest expenses forcorporate income tax, if Tuesday SRL (1) takes the loan from the bank; and (2) takes the loan from Week Ltd.Note: you should ignore any foreign exchange differences due to changes in the euro/lei exchange rate.(2 marks)(c) On the assumption that Tuesday SRL took the loan from Week Ltd and has registered the interest expenseas part of its expenses, determine the corporate income tax due by Tuesday SRL for each of the tax year(s)of its existence.Note: you should ignore any value added tax implications and any legal reserve requirements. (14 marks)(25 marks)3 (a) Wednesday SRL is a company established and registered for value added tax (VAT) in Romania on 30 March