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I am looking at the BPP revision kit, Q. 32 (b) (ii)
Is there any reason why the machinery bought on 2 Oct 2010 for £5,300 and sold on 12 Feb 2011 for £3,600 can’t be treated as a SLA and therefore qualify for a balancing allowance?
Thanks!It is covered by the AIA sob if treated as a short life asset it would give a balancing charge
Hope this helpsStill a bit confused on this one. The AIA is pro-rated to £75,000 for the 9 month period so not all of the purchases are covered. If the machinery is treated as a short life asset, (leaving the rest of the purchases to qualify for the AIA up to £75,000) won’t a balancing allowance apply on the sale?
Thanks for your patience!The reason is that machinery is not a shortlife asset unless it is made clear it has an expected useful life of < 4 years from the end of the accounting period in which it was acquired. There is no mention of this in the question so short life assets are not an issue
Hope this helps
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