Ans 10. DA-P&M

Ans 10. DA-P&M - BUSI 0018 Hong Kong Taxation...

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TA_U10_DA_Plant 1 BUSI 0018 – Hong Kong Taxation Tutorial Questions Tutorial 10 – Depreciation Allowance: Plant and Machinery Answer 23 (a) Computation of depreciation allowance for ABC Limited for 2009/10: 20% 30% Allowance Reducing value b/f $65,000 $30,000 Addition 8,000 - Less: Initial allowance (60%) (4,800) $ 4,800 $68,200 $30,000 Less: Disposal ( 700) - . $67,500 $30,000 Annual allowance (13,500) ( 9,000) 22,500 Reducing value c/f $54,000 $21,000 $27,300 (b) Depreciation allowance/charge for the old van for 2009/10: Reducing value $4,000 Less: Sale proceeds (trade-in value) (5,000) Balancing allowance /(charge) $(1,000) Depreciation allowance for the new van for 2009/10: Capital payment made: $10,000 + $5,000 + $1,000 x 3 x $25,000/$30,000 = $17,500 Allowance Cost (cash price) $40,000 Less: Initial allowance (60% x $17,500) (10,500) $10,500 $29,500 Annual allowance (30%) (8,850) 8,850 Reducing value c/f $20,650 $19,350
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