Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Reader Interactions

Comments

  1. Hi Tutor,
    In the previous lecture, you mentionned that when the disposal price of an asset is lower than the cost of the asset, we consider the selling price. But when the selling price is higher than the cost, we consider the cost.

    In the actual lecture, when a private used asset is sold, we should consider the selling price even if it is higher than the WDV. Is this correct ?

    Now in case the selling price is higher than the WDV, we will have a balancing charge (negative value). If the asset is privately used for 30%, do we compute 70% of the balancing charge as allowance ? And will be the WDV C/F for that asset (Negative or Nil) ?

    Thanks.
    Daniel.

    • For private used cars by owner – Non pool asset, we consider selling price in relation to DWV (think of this as a discounted original price over time), aka balancing adjustment.

      So your first question is incorrectly asked.

      Once balancing adjustment is calculated, the non pool asset of this item is fully cleared after disposal, therefore, the WDV C/F is shown as Nil for this item.

      If sale price > WDV, the business gained, therefore, it occurred as balancing charge (thinking as the taxman wants a share of the business gain), rather than balancing allowance (where the business lose as sale price < WDV).

      The balancing charge will be a negative value on your allowance column to make it less, if this balancing charge is greater than your entire allowance, then guess what, it will be added to your adjustment tax bill.

      For qualified privately used, prorated to % business use for the balancing adjustment.

Leave a Reply