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Unit 14 of OT lectures
Example 1
Capital allowances: 25% reducing balance
How is this calculated?Let’ say item cost 1200.
First year’s A = 25% x 1200 = 300. WDV of item = 1200 – 300 = 900
Second year’s CA = 25% x 900 = 225. WDV of item = 900 – 225 = 675and so on.
Like depreciation on a WDV basis.
For the last year the balancing charge or allowan e is the Cash proceeds – b/f WDV
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