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Business Property income

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Business Property income

  • This topic has 3 replies, 3 voices, and was last updated 3 years ago by Tax Tutor.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 26, 2020 at 4:43 am #563166
    adarsh1997
    Participant
    • Topics: 630
    • Replies: 279
    • ☆☆☆☆

    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?

    February 29, 2020 at 4:54 am #563496
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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

    March 2, 2020 at 9:11 am #563699
    poonamvimal
    Participant
    • Topics: 32
    • Replies: 23
    • ☆☆

    Sir,
    Would they be considering the property income recd as advance in March in the year 2018/19?

    March 3, 2020 at 7:22 am #563804
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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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