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Thank you for all your lectures. I have a doubt in BPP exam kit for june 2018 exams
Partnership question number 98
Bayle is self employed and prepares books to 30th sept. A new partner, Fyle is admitted on 1/12/2017 as a partner for 20%. Her Tax adjusted profit for year ended 30sept 2018 is 216,000 and 240,000 for 30sept 2019
Trading income assessments for Fyle : 1)2017/18 -Actual – 14400 . 2) 2018/19- 44000 (basis period -2nd year -first 12 months)
Is it not for 2018/19- CYB-216000*20%=43,200 ?
I don’t have the BPP kit but from what you have written the basis of assessment for Fyle is correctly shown as “First 12 months” as Fyle is treated as having commenced trading on 1 December 2017 and therefore has an opening period of 10 months to 30 September 2018 in which he / she made a profit of (216,000 x 10/12 x 20% = 36,000) and has a trading profit for the year end 30 September 2019 of (240,000 x 20% = 48,000).
Hence in 2nd tax year of assessment (2018/19) Fyle has a 10 month accounting period ended in tax year and therefore the basis of assessment is “First 12 months” which will be 36,000 + (2/12 x 48,000 = 8,000) = 44,000