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following is a reproduction of a worked example:
“A company is considering whether or not to purchase an item of machinery costing 40000 in X5. it wd have a life of 4 years, after which it wd be sold for 5000. the machinery wd create an annual cost saving of 14000.
the machinery wd attract tax-allowable depreciation of 25% on the RB basis which could be claimed against taxable profits of the current year, which is soon to end. a balancing charge or allowance would arise on disposal. that tax rate is ….”
in the answer, he starts depreciating in year 0, rather than year 1. in which part of the wording above, will i find when to start depreciating the machine?
The starting point is time 0, which is the end of the current year.
The second paragraph says that the capital allowances (tax allowable depreciation) could be claimed against the profits of the current year. So the first capital allowances are at time 0.
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