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Hi John, if i recall correctly, reducing line basis does not take into account residual value. Then why do we deduct 4 million at the year 4 to get the 0.5million tax allowable depreciation?
i know 4 million is stated in the question but we do not take into account residual value for the reducing line basis isn’t ?
It is reducing balance basis (not reducing line basis 🙂 ).
The sale proceeds are not taken into account when calculating the TAD for each year except the final year. In the final year there is a balancing allowance or balancing charge.
You post under another question today says that you have now watched the Paper PM lectures on this, and so I assume that you will not be clear about it 🙂
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