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disposal of copyright

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › disposal of copyright

  • This topic has 2 replies, 2 voices, and was last updated 11 months ago by twinkling.
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    Posts
  • July 21, 2021 at 4:09 pm #629048
    twinkling
    • Topics: 4
    • Replies: 3
    • ☆

    31 March 2021, Jessica sold a copyright for £28,800. The copyright had been purchased
    on 1 April 2015 for £21,000 when it had an unexpired life of 15 years.
    What is Jessica’s chargeable gain in respect of the disposal of the copyright
    A £0
    B £20,400
    C £16,200
    D £7,800
    the solution in the text
    ale proceeds 28,800
    Less: Allowable element of acquisition cost (W) (12,600)
    –––––––
    Chargeable gain 16,200
    –––––––
    Working: Allowable element of acquisition cost
    Remaining life at disposal = 9 years
    Estimated useful life = 15 years

    Allowable cost = £21,000 × 9/15 = £12,600
    Hello Sir may you please help me understand why they used the remaining years 9 instead of the period of ownership 6

    July 26, 2021 at 1:50 pm #629488
    Tax Tutor
    • Topics: 2
    • Replies: 3929
    • ☆☆☆☆☆

    If you look back to the Study Notes (page 78 Section 6) you will see that the use of the period of ownership of the seller is the amount BY which you REDUCE the original cost in order to calculate the figure of allowable cost which will give you the same result.

    July 28, 2021 at 5:35 am #629618
    twinkling
    • Topics: 4
    • Replies: 3
    • ☆

    thank you Sir

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