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BPP QUESTION 210

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › BPP QUESTION 210

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by Tax Tutor.
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  • August 1, 2021 at 12:34 pm #630024
    ABDULLAHI312
    Participant
    • Topics: 106
    • Replies: 97
    • ☆☆☆

    Xenon ltd has included a deduction in its accounting profit of 3200 in respect of the annual leasing cost of a car which has recommended list price of 16000 and CO2 emission of 120 g/km. the lease of the car started on 1st April 2020 and the car has been used for the whole of the 12 month period ended 31 march 2021
    when preparing adjusted profit for tax purposes what is the allowable deduction in respect of leasing cost in the year ended 31 march 2021?
    answer: 2720.
    my concern: other than renewal of short leases where do we get that 15% applied to the list price as dis-allowable deduction?
    thanks

    August 2, 2021 at 3:02 pm #630162
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    You need to look back at your study notes – Chapter 4 deals with the adjustment of trading profits and this specific issue is dealt with in section 2.2 note (i).
    The issue about renewal of a short lease applies to property leases and is applicable to the legal and professional costs associated to the renewal of the lease.

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