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Sir, I am a bit confused regarding the years to use in capital allowance calculation. Could you please explain why does the examiner in this question begin capital allowance calculation from year 0? Is it right to assume that whenever the first year allowance of 50% is given we must begin the calculation from year 0?
Could you point out a statement in the question that asks us to do so?
Thank You ?
When we first get the benefit of capital allowances depends either on what is written in the question, or (it is not made clear in the question) then on the assumption you make. (Almost always in P4 questions – certainly in question 1’s – you need to make assumptions, and you then get the marks if the assumption is sensible, whether or not the examiners answer makes the same assumption. That is why in Question 1’s you are always asked to state your assumptions.)
However, in this question, it specifically states “….recover capital allowances…..in full in the year they are incurred…”
(This question was set by the previous examiner, who set some very odd questions and often used odd wording. The current examiner is always much clearer 🙂 )
So when the question says “recover capital allowances…..in full in the year they are incurred”, we must begin the allowance working from year 0? Even if I don’t start my calculation from year 0 and begin from year 1 instead, will he award me marks if I state my assumption?
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