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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Lace Ltd –Corporation tax payable for the nine-month period ended 31 Dec
For capital allowances purposes Lace Ltd brought forward the following tax written down values as at 1 April 2018:
Main pool
£210,000
Special rate pool
£30,000
Lace Ltd purchased a new machine for £240,000 on 14 June 2018 and sold an old machine, which had cost £24,000, for £28,800 on 4 December 2018. All figures relating to machinery additions and disposals are inclusive of VAT.
so here’s where I’m stuck:
Additions qualifying for AIA
14 June 2018 -£240,000 x 5/6 = 200,000 (why do we multiply the purchase by 5/6 if we are time apportioned to 9 months??
AIA -£200,000 x 9/12= 150,000 (this I understand)
Disposal:
4 December 2018 -£24,000 * 5/6 = 20,000 (same here we multiply the original costs by 5/6 ??
You are told that the figures are inclusive of VAT – it has nothing to do with the length of the accounting period
thank you