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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
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
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.
thank you Sir