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Lace Ltd –Corporation tax payable for the nine-month period ended 31 Dec

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Lace Ltd –Corporation tax payable for the nine-month period ended 31 Dec

  • This topic has 2 replies, 2 voices, and was last updated 3 years ago by GAN473.
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  • March 4, 2022 at 1:39 am #649780
    GAN473
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    For capital allowances purposes Lace Ltd brought forward the following tax written down values as at 1 April 2018:

    Main pool

    £210,000

    Special rate pool

    £30,000

    Lace Ltd purchased a new machine for £240,000 on 14 June 2018 and sold an old machine, which had cost £24,000, for £28,800 on 4 December 2018. All figures relating to machinery additions and disposals are inclusive of VAT.

    so here’s where I’m stuck:

    Additions qualifying for AIA
    14 June 2018 -£240,000 x 5/6 = 200,000 (why do we multiply the purchase by 5/6 if we are time apportioned to 9 months??
    AIA -£200,000 x 9/12= 150,000 (this I understand)
    Disposal:
    4 December 2018 -£24,000 * 5/6 = 20,000 (same here we multiply the original costs by 5/6 ??

    March 4, 2022 at 11:10 am #649805
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    You are told that the figures are inclusive of VAT – it has nothing to do with the length of the accounting period

    March 12, 2022 at 3:15 am #651102
    GAN473
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    thank you

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