Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Reality Ltd Property income
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- September 4, 2023 at 9:16 pm #691198
Reality Itd in business providing property services to landlord. The company also lets out property which it owns itself and during the year ended 31st March 2021 let out properties.
Property one:
This is a freehold house that is let out from 1 April 2020 to 31 December 2020 at a monthly rent if £750, payable in advance. On 31 December 2020 the tenant left owing two month rent which really Itd was unable to recover. The property was not re-let before 31 March 2021. During 2021 the company spent £6,800 on repairing the roof of this property. During February and March 2021 €1,100 was spent on advertising for new tenants.
Property two:
This is a free hold house that is let out furnished. The property was let out throughout the year ended 31
March 2021 at a monthly rent of £625, payable in advance. During July 2020 Realty Ltd. spent £430 on replacement furniture. Proceeds from old furniture were 200.
Property three:
Swhich is equivalent lost /similan quality
This is a freehold house that is let out unfurnished. This property was purchased on 1st October 2020 for £180,000 and was empty until 31st December 2020 during this period Realty Ltd spent €3900 en advertising the property. The property was let out from January 2021 to March 2021 at a monthly rent of £800, payable in advance.Insurance
Realty Ltd insured all of its rental properties at a cost of £5,040 for the year ended 31st December 2020 and €5,280 for the year ended 31st December 2021, The insurance is payable annual in advance.Required:
Calculate Realty Ltd’s property business profit for the year ended 31st march 2021My question is regarding insurance, can you please tell me how to do it? Our acc year is 1Apr 2020-31 March 2021
Since we follow cash basis should only 5280 be included as it’s payable annually in advance so would be paid in Jan 2021 so within the year. And 5480 would have been paid in Jan 2020 so outside the acc year. So per cash basis only 5280 be included?September 5, 2023 at 5:54 pm #691446The property income would all be added together
Then deduct all the expense – the insurance would be on an accruals basisSeptember 6, 2023 at 11:42 pm #691578But why? We follow cash basis??? Unless clearly stated otherwise
September 7, 2023 at 9:44 am #691627Ltd Company
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