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The calculation of the capital allowance under exam question (12/08)- Jogger

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › The calculation of the capital allowance under exam question (12/08)- Jogger

  • This topic has 5 replies, 3 voices, and was last updated 4 years ago by Tax Tutor.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • July 18, 2020 at 2:26 pm #577300
    Omarshamma83
    Participant
    • Topics: 4
    • Replies: 16
    • ☆

    Dear Sir.

    Jogger question number 240 in BPP exam revision kits which is amended from exam question ( 12/08). i will copy below what exactly is written in respect to the capital allowance.

    July 20. 2019: sold a special rate pool motor car (117,00)
    July 31. 2019: Purchase motor car Co2- 105 11,800
    Aug 15. 2019: Purchase motor car Co2- 45 9,000
    Sep 30. 2019: Purchase Machinery 500,000
    Dec 15. 2019: Purchase computer system 12,500
    Mar 14. 2020: sold a lorry (8,600)

    The motor car sold on July 20. originally cost more than this amount. The computer system purchased on Dec 15 has a precipitated working life of 6-years and relevant election has been made. the lorry sold for 8,600 originally cost 16,600.

    The plant and machinery has opening balances on Apr 1, 2019 as below:
    main pool: 26,600
    special rate pool: 21,167.
    the company will claim the maximum available capital allowances.

    the Answer:
    the answer of the above question was understood for me, except one thing, which i need your kind help on it, please:

    for the machinery purchased on Sep 30. 19 they computed only 200,000 as AIA ( 100% capital allowance). The remaining 300,000 were added to the main pool and 18% was used to compute the capital allowance.
    there is no indication that 500,000 is exceeding the AIA limit of 1,000,000 or even if its short short or long assets. The tax payer here is a corporate company and they have full year accounting period.

    I really appreciate if you have any idea why this treatment of AIA ( 200,000 qualified for full capital allowance claim and only 18% for the remaining 300,000) as there is nothing mentioned in the exam report or the answer more than these figures.

    Thank you in advance.

    Omar..

    July 20, 2020 at 12:42 pm #577451
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Are you using the FA 2019 version – as if you are using an older version the old level of AIA was £200,000!!

    July 20, 2020 at 12:54 pm #577455
    Omarshamma83
    Participant
    • Topics: 4
    • Replies: 16
    • ☆

    Yes Sir, am using the new version of BPP exam kit for the exam session 2020.

    July 21, 2020 at 7:00 am #577516
    fadeya
    Participant
    • Topics: 6
    • Replies: 8
    • ☆

    have got the exact same question regarding this and would like to know the answer to this, thank you

    July 21, 2020 at 9:30 am #577538
    Omarshamma83
    Participant
    • Topics: 4
    • Replies: 16
    • ☆

    maybe its a mistake by BPP, but let us wait for the Sir’s replay.

    July 22, 2020 at 11:21 am #577640
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    I can only assume it is indeed an updating error in the BPP text which has left the AIA at last year’s figure of £200,000 rather than updating answer for the increase in the limit to £1m

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