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In this lecture “Tax Adjusted Trading Profit Individuals (part 2)”
In the solution there is a point of purchase of new shop of 1200 pounds which is not given in the question and the personal use of the goods of 460 by the owner should be accounted at the market price right? so why in the lecture it is adding back the difference between the market price and the original cost?
1) The £1200 legal fee is given in the question – see note 3 – and because it is in connection with capital expenditure it is a disallowed expense (see section 2.2 (g))
2) see section 2.2 (p) and read the full note and apply it to the example – no adjustment has been made in the accounting system and therefore the add back is at full market price. If as discussed in the lecture and as stated in section 2.2(p) the accounting system had already accounted for the cost of the goods taken for private use then the adjustment would only be for the difference between the cost and the market value ie the profit.