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Hi,
I am trying to work out a question from December 2008 called ‘Jogger Limited’. I have a query with respect to the calculation of capital allowances in this question.
The tax written down values of plant & machinery:
– Main pool – 26,600
– Special rate pool – 18,800The following transactions took place:
– 20 July 2012 – Sold special rate motor car – (11,700)
– 31 July 2012 – Purchased motor car C02 135g/km – 11,800
– 30 September 2012 – Purchased machinery – 20,000
– 15 December 2012 – Purchased computer system – 12,500 (short life asset)
– 14 March 2013 – Sold a lorry – (8,600)When calculating capital allowances I included the amount of machinery of 20,000 as qualifying for AIA, however in the answer for some reason an amount of 25,000 has been included as the cost of the machinery. Is there any reason for this please?
Thanks!
Hi,
I saw the same thing and i’ve interpreted that is the wrong amount in the text of problem. Probably had to be 25000, instead of 20000.
An other interpretation couldn’t be!:)
do you know why isn’t taken the indexation of profit on disposal of share at this company, in the corporation tax computation?!
Because Note 7 states that the chargeable gain of £98,300 is after taking account of indexation
Correct, thank you!
But if you look at statement on the beggining of problem there is 102.340. If £98,300 is after indexation then £102,340 is after-after? I mean couldn’t be a lower amount after indexation, but bigger. And is in statement at 98,300. Anyway, i hope to be able to understand the details of problem in the exam as english isn’t my first language:(.
Don’t worry about it I can understand you 🙂 from what I can gather the 102,340 is before not after. Calculations then must be done from sale proceeds to arrive at the chargeable gain. However you do not need to go into detail about that because the question gives you the chargeable gain and that is what we require in order to calculate the taxable total profit.
I can only assume you are referring to the updated version of this in the BPP material? I again do not have the BPP material and the version of Jogger that I have does not have the same figures of asset additions but I can only assume from what you have stated that there is an error in the question. So far as the gains issue is concerned the correct chargeable gain has indeed been given by the examiner so use it in the CT Comp. It will of course be lower than the accounting profit on disposal as we do of course get Indexation Allowance to further reduce the gain!
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