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Tax question

Forums › Ask CIMA Tutor Forums › Ask CIMA F1 Tutor Forums › Tax question

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  • March 23, 2019 at 8:09 pm #510238
    xenofondas
    Member
    • Topics: 5
    • Replies: 1
    • ☆

    Is a tax allowance of say 50% on new PPE a tax depreciation affecting TWDV the following year or does the TWDV in period two = cost – accounting depreciation ?

    e.g new PPE of 100 000
    allowance of 50%
    accounting depreciation 10%

    TWDV for period 2 = 50 000 or 90 000?

    thanks

    March 24, 2019 at 8:48 pm #510319
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The 50% is applied to the 100,000 in the first year to give a TWDV of 50,000 and then the 50% is applied to this 50,000 to give the TWDV in the second year. The accounting depreciation is irrelevant in calculating the TWDV.

    Thanks

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