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CJ Co Dec'10

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › CJ Co Dec'10

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 29, 2014 at 8:58 pm #171765
    marta0101
    Member
    • Topics: 13
    • Replies: 25
    • ☆

    Hi John

    Im trying to understand how capital allowances were calculated in this question in year 4.

    I the solution it has a value of $1,476,562* in year 4
    *This figure includes the balancing allowance

    I calculated it in the following way:

    Y0 Investment $3,500,000
    25% (875,000)
    Y1 $2,625,000
    25% (656,250)
    Y2 $1,986,750
    25% (492,188)
    Y3 $1,494,562
    25% (373,641)
    Y4 B/A $1,120,922

    Can you please advice what im doing wrong?
    Regards
    Marta

    May 30, 2014 at 9:55 am #171849
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54754
    • ☆☆☆☆☆

    Your calculations are wrong!

    Y1: 2625000 x 25% = 656250. This leaves a tax written down value of 2625000 – 656250 = 1968750 (not 1986750)

    Y2: 25% x 1968750 = 492188. This leaves a tax written down value of 1968750 – 492188 = 1476562 (which is the same as the answer).

    In the final year there is no 25% – just a balancing allowance or a balancing charge.

    May 30, 2014 at 7:32 pm #171993
    marta0101
    Member
    • Topics: 13
    • Replies: 25
    • ☆

    Thank you John, I dont know how I didnt noticed that. :s

    May 31, 2014 at 9:06 am #172069
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54754
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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