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July 27, 2015 at 11:55 am
since the asset is being sold at the END of the 2nd year, shouldn’t we calculate capital allowance for the 2nd year before calculating the balancing charge/allowance???
John Moffat says
July 27, 2015 at 3:45 pm
I don’t know whether or not you have taken Paper F6 (UK tax), but the tax rule is that there is a writing down allowance each year except for the year in which it is sold – in the year it is sold there is only the balancing charge or allowance.
(However, if you do take writing down allowance in the final year, and then calculate the balancing charge/allowance (which will obviously be different) then the net affect will be exactly the same and so you would still get full marks in the exam. Have a try and you will see what I mean )
July 27, 2015 at 4:38 pm
Yes you are absolutely right, net effect is the same, interesting. Anyways thank you so much sir!
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