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Calculating Corporate Income Tax

Forums › Ask CIMA Tutor Forums › Ask CIMA F1 Tutor Forums › Calculating Corporate Income Tax

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • January 1, 2022 at 12:16 am #645146
    A.Nizar
    Member
    • Topics: 2
    • Replies: 0
    • ☆

    In Kaplan’s F1 Exam kit there is a question pertaining to the calculation of corporate income tax.

    It states:

    “Tax Relief on capital expenditure is available at the following rates;

    – Buildings 4% p.a straight line basis
    – All other Non-Curr. tangible assets are allowed tax depreciation at 27% on reducing balance basis.

    Non Current Assets cost @ 01/01/20X5

    Land – $27,000
    Buildings – $70,000
    PPE – $80,000

    However, in the answers, there is no tax depreciation relating to the land despite there being no instructions to avoid land in the computation. Is there a specific rule relating to land I am unaware of?

    Thank you in advance

    January 7, 2022 at 10:39 pm #645487
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    Hi,

    Yes, land is not subject to any tax depreciation as it will not fall in value. It will only appreciate and the gain will be taxed upon final sale.

    Thanks

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