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Issues in computing indexation allowance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Issues in computing indexation allowance

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by Tax Tutor.
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    Posts
  • May 12, 2017 at 9:12 am #385951
    stellaye
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hi, when I am trying the BBP practice kit questions I found out a issue in computation.

    For example:
    Question 162 involves in indexation allowance, the answer compute it as below:
    Indexation allowance
    (263.0-215.1)/215.1X£8000=£1781

    Although I used the same equation to compute, I firstly got the result of the part
    (263.0-215.1)/215.1=0.223
    which makes the indexation allowance £1784

    Therefore different from the standard answer.

    So which method should I use in exam?

    Thanks.

    May 15, 2017 at 3:16 pm #386295
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    When re-indexing the share pool you do NOT round to a 3 dp indexation factor – hence your difference

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