Sware Ltd is a software company set up in the Xinjiang Autonomous Region. Sware Ltd’s enterprise income tax (EIT) rate is 25%. The company’s accountant has prepared the following statement of profit or loss for the year end 31 December 2014. Notes: (1) Customers who settle their bills within 30 days receive an early payment discount of 2%. Discounts totalling RMB55,000 were deducted directly from sales. (2) Staff welfare is calculated and provided for in the accounts at 14% of the wages and salaries paid of RMB8,240,000. The actual amount of staff welfare expenses incurred was RMB1,026,350. (3) Entertainment expenses incurred in the year 2014 were as charged in the profit or loss account, i.e. RMB967,000. Entertainment expenses incurred in 2013 in excess of the deduction threshold were RMB68,000. (4) The bad debt related to a debtor who went bankrupt in 2013. The accountant has submitted a report to the tax bureau in relation to this bad debt. (5) The specific provision for doubtful debts relates to an amount which was difficult to recover. The accountant has submitted a report to the tax bureau in relation to this specific provision. (6) These research and development costs qualified for an additional deduction. (7) The compensation was due to the late delivery of software to the customers. (8) Sware Ltd was penalised by the State Administration for Industry and Commerce because of misstatements on its website. (9) Project Pibeta relates to the piloting of software encouraged by the government. The project was started in 2013 and is expected to be completed in 2016. The project is subsidised by the government (see (18) below). (10) A fire destroyed a warehouse with a net book value of RMB2,500,000. Sware Ltd received insurance compensation of RMB2,284,000. The accountant has submitted a report to the tax bureau in relation to this loss. (11) Sware Ltd declared an interim dividend of RMB5,000,000 in 2014. Individual income tax was withheld from this interim dividend before distribution to the company’s shareholders. (12) A donation receipt was obtained for the donation to China Red-Cross. (13) A donation receipt was obtained for the donation to the school. (14) Sware Ltd acquired a new subsidiary in 2014 and wrote off the goodwill incurred on this acquisition. (15) Sware Ltd lent some of its surplus funds to its Shanghai subsidiary at an interest rate of 36% per annum. The market interest rate was 8% per annum. (16) Sware Ltd has invested some of its surplus funds in the capital market. The profit on the sale of government bonds included interest of RMB15,000. (17) The A-shares were acquired in 2012. (18) The government granted Sware Ltd a specific financial subsidy to cover all of the expenditure on Project Pibeta. Required: (a) Calculate the enterprise income tax (EIT) payable by Sware Ltd for the year 2014. Note: You should start your computation with the net loss figure of RMB3,385,150 and list all of the items referred to in notes (1) to (18) identifying any items which do not require adjustment by the use of zero (0). (11 marks) (b) Identify and briefly describe ANY TWO enterprise income tax (EIT) preferential policies which Sware Ltd could consider applying, in addition to the qualified research and development additional deduction. (4 marks)