Tax Assignment 4 Question Deprecia
Question 2 (40 marks)
Ivan Wong has run a transportation business for many years under the name of Ivan Wong & Co.
The following information is provided by Ivan for his business.
1.
Tax written down values of the plant and machinery brought forward from the year of assessment 2012/13 (The year end date of the business is March 31) are:
$
20% Pool
20,000
30% Pool
110,000
2.
Movements of the plant and machinery in the year ended March 31, 2014:
(i)
1 motor van (AA = 30%) costing $330,000 with accumulated depreciation of $198,000 was bought in April 2010 and was sold during the year for $3,000. A new motor van was purchased for $400,000.
(ii)
3 sets of computer (AA = 30%) costing $15,000 each were bought on hire purchase terms. A down payment of $9,000 was paid on May 1, 2013, and the balance owing together with interest is to be paid by 24 equal monthly instalments of $1,700 each month, each instalment being payable on the 1st day of the month starting from July 1,
2013.
(iii) The 30% pool includes a motor car which has been used by Ivan's son occasionally for private purpose since April 1, 2013. The portion of private use has been agreed with the Inland Revenue Department to be 50%. The cost of the car was $78,000 in June
2011 (the market value of the car at that time was the same as the reducing value of the motor car as at March 31, 2013).
(iv) Ivan inherited his father's trade and took over the office furniture for use in his own business. The tax written down value of the furniture (AA = 20%) taken over was
$6,000 at the date of cessation of his father's business.
(v)
The old machinery (cost of $30,000 and accumulated depreciation of $30,000) which is included in 20% pool were scrapped and new one costing $40,000 have been ordered but not yet delivered. An unrecoverable deposit of $10,000 was paid on March 31,
2014.
Required:
Calculate the total amount of depreciation allowances for Ivan Wong's business for the year of assessment 2013/14. Show all your
Ivan Wong has run a transportation business for many years under the name of Ivan Wong & Co.
The following information is provided by Ivan for his business.
1.
Tax written down values of the plant and machinery brought forward from the year of assessment 2012/13 (The year end date of the business is March 31) are:
$
20% Pool
20,000
30% Pool
110,000
2.
Movements of the plant and machinery in the year ended March 31, 2014:
(i)
1 motor van (AA = 30%) costing $330,000 with accumulated depreciation of $198,000 was bought in April 2010 and was sold during the year for $3,000. A new motor van was purchased for $400,000.
(ii)
3 sets of computer (AA = 30%) costing $15,000 each were bought on hire purchase terms. A down payment of $9,000 was paid on May 1, 2013, and the balance owing together with interest is to be paid by 24 equal monthly instalments of $1,700 each month, each instalment being payable on the 1st day of the month starting from July 1,
2013.
(iii) The 30% pool includes a motor car which has been used by Ivan's son occasionally for private purpose since April 1, 2013. The portion of private use has been agreed with the Inland Revenue Department to be 50%. The cost of the car was $78,000 in June
2011 (the market value of the car at that time was the same as the reducing value of the motor car as at March 31, 2013).
(iv) Ivan inherited his father's trade and took over the office furniture for use in his own business. The tax written down value of the furniture (AA = 20%) taken over was
$6,000 at the date of cessation of his father's business.
(v)
The old machinery (cost of $30,000 and accumulated depreciation of $30,000) which is included in 20% pool were scrapped and new one costing $40,000 have been ordered but not yet delivered. An unrecoverable deposit of $10,000 was paid on March 31,
2014.
Required:
Calculate the total amount of depreciation allowances for Ivan Wong's business for the year of assessment 2013/14. Show all your