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Hello Sir,
I wanted to ask in case of disposals arising at the end of a period of final account(about to cease trading), our disposal proceeds= sale proceeds? I mean we have to ignore the rule of lower of cost and sale proceeds in the year of Cessation?
Any help is much appreciated.
Also sir, can you corroborate my understanding of balancing allowance and charges :
balancing charge can arise any time of trading, but balancing allowance only occurs in the final period of account (in other words at the time of cessation).
Thank you.
As per our study notes and lectures – a balancing adjustment of either type will arise on the disposal of any non pool asset.
A balancing charge may arise for any accounting period on the pools but a balancing allowance will only arise on a pool on cessation of tradingOn your first question – we always use the lower of sale proceeds or original cost
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