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Why is long life asset not taken @6% being a special rate pool item? And ONLY machinery of 45k should be treated as AIA as per notes.
Also in special rate pool for long life asset mentions expenditure exceeding 100k, should it not have any significance in this example. Please explain the above and also the significance of 100k mentioned in special rate pool in general, under long life asset SR pool.The study notes state:
“If expenditure qualifying for AIA exceeds the AIA limit, the AIA should be allocated firstly to special rate expenditure before main pool expenditure, as any excess expenditure will only attract 6% WDA in the special rate pool, whereas 18% is available in the main pool.”
The answer therefore allocates the maximum £1M AIA to the special rate pool expenditure in preference to the main pool expenditure and the excess has WDA of 6% applied to it.
Clearly this level of expenditure exceeds the £100,000 limit and therefore must have long life asset rule applied to it.
I think these points are made in the lecture – please tell me have you watched the lecture?
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