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Non-wasting chattels

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Non-wasting chattels

  • This topic has 6 replies, 4 voices, and was last updated 5 months ago by Tax Tutor.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • May 8, 2020 at 4:34 am #570290
    harigovind1
    • Topics: 5
    • Replies: 9
    • ☆

    I have a problem on this question, I am writing it down.
    “Habib purchased a copyright on 30 April 2003 for Gbp31,320. The remaining life of the copyright at the date of purchase was 30 years. On 30 April 2019, Habib sold the copyright for GBP 27900.”
    Calculate allowable gain or loss.
    My answer to this question was GBP 11,196, but question has computed it as GBP 13,284.
    If I am wrong in any of the concept, please help me clarify it.
    Thankyou

    May 8, 2020 at 11:09 am #570315
    Tax Tutor
    Keymaster
    • Topics: 2
    • Replies: 3461
    • ☆☆☆☆☆

    Have you watched the OT lecture and worked through the relevant study notes (?)- as you should then have got the correct answer! Let me know when you have done this and if you have then understood the answer.

    July 21, 2020 at 8:02 pm #577588
    chjillani
    • Topics: 6
    • Replies: 5
    • ☆

    answer

    Net book value=31320/30=1044
    use full value=1044*17=17748
    cost when purchased=31320
    cost when sold=31320-17748=13572
    sold = 27900
    less cost = (13572)
    gain = 14328 answers

    August 8, 2020 at 5:21 pm #579664
    Tax Tutor
    Keymaster
    • Topics: 2
    • Replies: 3461
    • ☆☆☆☆☆

    Sale Proceeds 27,900

    Cost 31,320
    Less:
    16/30 x 31,320 = (16,704) (14,616)

    Gain 13,284

    Not sure how this presentation will distort when i submit this answer but I think your only error on your revised answer above is that you have reduced the cost by 17 years instead of 16 years!

    August 12, 2020 at 1:32 pm #580263
    szogun
    • Topics: 14
    • Replies: 23
    • ☆

    Hi, May also add the question to the other wasting chatles please.

    I am confused by the approaches in calculation of allowable cost for eg copyrights. I have compare Open Tuiton approach with the Kaplan Text book (page 625, chapter 20). Simlar question but the allowable cost is calculated in two different way which gives the different answer:

    – In your notes the is the reduction in original cost by P/Lx (C-S)
    – in the Kaplan text book the formula is different; allowable cost = original cost x Remining life at disposal/ estimated useful life

    Please, please could let us know why there is a difference and which way is right way?
    many thanks Anna

    August 13, 2020 at 10:58 am #580371
    szogun
    • Topics: 14
    • Replies: 23
    • ☆

    hi Sir, Please ingore my message I have worked out that you ca used both methods, and each is as good. thank you

    August 14, 2020 at 5:19 pm #580565
    Tax Tutor
    Keymaster
    • Topics: 2
    • Replies: 3461
    • ☆☆☆☆☆

    Well done – pleased you were able to find the answer yourself!

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