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Dear Sir,
In Do not panic the FII is included net not 25000*100/90. it’s clear from the text that 25000 was received. Anyway, i hope that in the exam will be clear all details.
2. Until now everywhere when was a premium received all the annual rent payable in advance was included in the total profit. In thai curry LTD – BPP, are included just 8/12. I see that this is the period of accounts, but is a rule like we have to included all just if is more that 8 months, for example?! Or…?!
thank you,
Hi I do not have the BPP material but in relation to the points you raise:
(1) if the question gives you the dividend received figure this must be grossed up x 100/90 to establish the FII. If a question gives you a figure labelled as FII then this is already a gross figure
(2) From what you have said you may be confusing the treatment of the premium RECEIVED where the assessable amount is assessed in full in the accounting period in which it is received whatever length that period may be, with the treatment of the premium PAID where we compute an ANNUAL trading profit deduction for the lessee, so that if an accounting period was 8 months long 8/12 of the annual deduction would be allowed.Thank you, but isn’t about premium. Is about accruals basis for the annual rent. For premium it’s clear for me. But, sometimes the annual rents is all that year taken in account and sometimes just for a part, even if had to be on an accrual basis for both. I think that i need one pause.:(
The accruals basis means the amount accrued in the ACCOUNTING PERIOD – if the accounting period is 12 months long then you want 12 months rental income, but if the accounting period is only 8 months long then you want 8 months of rental income, assuming of course that the property has been rented out for the entire accounting period.
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