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Tax allowable depreciation Straight line method

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Tax allowable depreciation Straight line method

  • This topic has 1 reply, 2 voices, and was last updated 10 months ago by John Moffat.
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  • August 26, 2021 at 2:52 am #632947
    anisahanesee
    • Topics: 1
    • Replies: 1
    • ☆

    Dear Sir,
    Is it possible to have a 5 year useful life of asset and the allowance for TAD at straight line of 25%. If so how would this be calculated.

    August 26, 2021 at 7:51 am #632982
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49602
    • ☆☆☆☆☆

    I cannot believe this would ever be the case in the exam (and in the exam TAD is almost always reducing balance).

    If it was the case then the TAD would be 25% of cost for each of the first four years. In the 5th and final year there would be the balancing charge of the difference between the sale proceeds and the tax written down value (the tax written down value would obviously be zero) in the normal way. If there were no sale proceeds then there would be no allowance or charge in the final year.

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