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Short life assets

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Short life assets

  • This topic has 2 replies, 2 voices, and was last updated 2 years ago by Burningdesire.
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  • October 5, 2020 at 12:59 pm #587401
    Burningdesire
    Member
    • Topics: 14
    • Replies: 14
    • ☆

    Hi Sir,

    From what I gathered in your video is the benefit of depooling short life asset is you get to claim the balancing allowance if applicable and if you dont depool, then the main pool as a whole will eat into your balancing allowance as you will have a high wda with everything from the main pool and low residual value of the short life asset. So the main benefit is to protect the balancing allowance is this right?

    Thanks

    October 6, 2020 at 11:40 am #587464
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    The main benefit is to ensure that you claim all the available CA in the lifetime of ownership of the asset as a balancing allowance will indeed arise. This will only be worthwhile where AIA is not available on the purchase, the asset will have a low residual value and the period of ownership will be short.
    If assets go into the pool only a WDA will be available – a balancing allowance will only be available on the cessation of trading not on the sale of the asset.

    October 6, 2020 at 4:55 pm #587485
    Burningdesire
    Member
    • Topics: 14
    • Replies: 14
    • ☆

    Thank you, i understand it much better now 🙂

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