Okay so my understanding is when you sell asset at NBV or WDV at end of investment and NBV or WDV is more than scrap value (if there is any) than it means we made profit and we pay tax on total amount and thats balancing charge. But if sold at lower than Scrap Value than thats Balancing Allowance and we get tax return on total remaining NBV or WDV which is lower than Scrap VAlue ofc.
*I may or am Wrong*
Recently in Question Darn Co of investment appraisal I saw they added Balancing Charge, and now I am very confused, I have exam on friday and I cant find a good understanding to why or what I should be doing i exam, please help it'll really be appreciated
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Balancing Charge or Balancing Allowance - NPV ,TAD Calc
2y ago#1Darn Co. does not have a balancing charge it has a zero scrap value so the balancing allowance is an allowance not a charge.
For example
WDV of say 845
Bal allow 845 30% of 254
Scrap 0
For example
WDV of say 625
Bal CHARGE 225 30% of 68
Scrap 850
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