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Hey guys!
I’m a newbie on here! Trying to get on with P6 (left it a bit late!) for June sitting.Can’t get my head around this calc…BPP revision kit book question 3b.
I don’t understand calculating the consideration required in the form of shares (which makes up part of the ‘Base cost of the shares’ calc.
I understand why we need to calc it, but not how! In this example:
Value of business transferred = £320,000
Less required to be in the form of shares
61500/79000 x £320000 = (£249,114)Amount left on loan account = £70,886
£61,500 is the gain to be deferred
£79,000 is the total gain (due to goodwill and premises revaluation).Why are these figures used in calculating the consideration in the form of shares?
Sorry if I’m being thick!!
I struggled with this one too.
As I understand it, of the total consideration £79k is the gain from the disposal of chargeable assets that needs to be relieved. The AE and losses b/f are £17.5k, therefore this ratio (61.5/79) of the total consideration (£320k) can be received in cash without incurring any CGT, the rest must be received in shares.
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