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Fubuki Co (dec10)

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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July 9, 2021 at 2:13 pm #627279
nbhutia
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Hi Sir,
I’m trying to figure out taxable profits answer. So profit less the allowance but I can’t figure out where is allowance comes from?
I understand it’s on tax allowable from on plant and machinery. Which has a scrap of £400,000. Straight line method with 25% tax. I thought the ppe is £3m-0.4scrap /4yrs * 25% but it’s wrong.
The allowance is 650 pa?
Thank you in advance.
July 10, 2021 at 9:37 am #627331
John Moffat
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The allowance is (3,000 – 400)/4 = $650 per year.
(This reduces the taxable profit which does result in a tax saving of 650 x 25% = $162.50 a year. The tax payable is $162.50 less than it would have been if there had not been any allowance.)
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