Hello,
-P Ltd purchased a freehold building on 1 January 2019, and it will be empty until 31 March 2019. The building is to let from 1 April 2019 at a monthly rent of £640 and on 15 March P Ltd received 3 month's rent in advance. On 1 January 2019 P ltd paid insurance of £480 for the year ended 31 Dec 2019. P Ltd has a year end 31 March 2019.
1. In the answer insurance has been calculated as follows:
-480 x 3/12=£120.
2. Could you explain how 3 months has been used?
Ask the Tutor ACCA TX-UK
Business Property income
This is corporate tax so an accruals basis applies to property income and hence 3 months of insurance expense is incurred during the accounting period to 31 March 2019
Sir,
Would they be considering the property income recd as advance in March in the year 2018/19?
As I said above this is corporation tax not income tax - we prepare CT computations for accounting periods NOT tax years
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