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Example 1 For Chaper 4 (OT Free Notes)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Example 1 For Chaper 4 (OT Free Notes)

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  • September 21, 2011 at 8:01 am #49877
    judyzhang1028
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    Hi,

    I have a question about the example located in Chapter 4.

    Note 4 describe that “the figure of 5,660 for repaires and renewals includes 2,200 for decorating the clothing shop during July 2010… and the building was in a usable state when it was purchased”.

    Would I consider the amount of 2,200 as an improvement for the retail shop so it is disallowable for the tax adjusted trading profit?

    Thanks!

    October 23, 2011 at 9:55 am #88286
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    If the repairs are necessary beffore the asset can be used then it is capital and added back. If however the asset could be used,as is the case here , they are genuine repairs and allowed

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