Hi John I have a question, regardng the 3rd year of the depreciation in the purchase option, why we consider as the tax allowable depreciation 39 (which is coming from 130 x30%) . Can you give me some light here cuz in my understanding it should be 180 times 25% depreciation as the tax allowance and then the 50k that are received for the sell should be taxed 30% as this is an income . Obviously my understanding towards this is not correct :( Thanks for the help!
Ask the Tutor ACCA FM
AGD Co. (12/05)
7y ago#1In the year of sale, there is no writing down allowance. Instead we subtract the sale proceeds from the tax written down value, and the difference is either a balancing allowance or a balancing charge.
I do suggest that you watch my free lectures on investment appraisal with tax, because I explain the rules about tax, with examples.
(The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well :-) )
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