- This topic has 1 reply, 2 voices, and was last updated 4 years ago by
.
- Posts
Hi Sir,
Thanks for your lecture and it really helps me a lot!
I am confused about some points in the Chapter4 and hope to get your professional advice if possible.
Example 1, Chapter 4, you said that the adjustment for the own-used goods is to add the net profit of these goods back. Why the answer to example 1 is add the original market price back? And for the question 10-John, the same, the official answer also adds the original market price back for the adjustment.
And for the question 10- John, again, why the decoration fee for the office is not adjusted back to the trading profit? The decoration fee is the improvement to the asset, right? We should regard it as the capital expense rather that the trading expense, shouldn’t we?
Hope to get your advice asap, thank you so much!:)
Best Regards,
EmmaHi Emma
In respect of goods taken by the proprietor for private use – the rule is stated in note (p) on page 23 of the notes – and in the review of the question in the lecture I explain the basis of the add back which is consistent with the rule in note (p) given in the notes which states the situations in which we either add back the full selling price or simply the profit margin – please check back to lecture and note and let me know how you get on.
In respect of a decoration cost this is revenue expenditure NOT capital expenditure – it is not an improvement it is simply returning the property to its proper state as would a repair
- You must be logged in to reply to this topic.