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Dear Sir
I just wish to clarify some basics:
Revalue at open market value regardless of existing use – Do we discard value in use valuations?
Depreciate over useful life less residual value – If the capital allowance is for example 40% in the first year in order to get the deferred tax amount do we ignore residual, in other words for tax allowance knock the whole 40% of the total value off? In other words ignore residual for the tax allowance calculation?
Hi,
The open market value is the fair value, so the value in use is not relevant. It is only relevant when looking at impairments.
The tax rules take the capital allowance and apply it to the cost of the asset, ignoring the residual value. The residual value is accounting terminology that is not relevant to the tax authorities.
Thanks
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