- This topic has 2 replies, 2 voices, and was last updated 11 months ago by .
- You must be logged in to reply to this topic.
PQ Awards Nominations
Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
For capital allowances purposes Lace Ltd brought forward the following tax written down values as at 1 April 2018:
Special rate pool
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)
4 December 2018 -£24,000 * 5/6 = 20,000 (same here we multiply the original costs by 5/6 ??
You are told that the figures are inclusive of VAT – it has nothing to do with the length of the accounting period