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Dear Opentuition,
In this example, in the case of business use car (1) ….. we are getting 4200 after deducting the disposal….
but why we are deducting the entire amount (which is 4200) as balancing allowance?
I might be missing an important point here….Please help me out :/
Thank you
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Because Car was sold and at year end we have not Car in our Pool. So we deduct the entire balancing amount and use it in calculation of allowance.
when the disposal proceed is less than the value u have on the column for the asset e.g the car , then it is called balancing allowance. So be cos the entire car was sold, the car cease to exit anymore hence must be writing off from the column and all the value must be taken to the capital allowance column as an addition .
Note this wen an asset is sold and u have a loss it is called balancing allowance
Balancing allowance only occur on cessation of business (very important)
But if it is sold for profit , then it will be balancing charges and this figure will be deducted from the total capital allowance column and also taken to adjusted profit table for tax purpose
Thank you
@osuja…Was very helpful 🙂
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