BTC - Paper Dec 08 - Sec 1/Task 1.2 - QUESTION

mmro Registered Posts: 21 New contributor 🐸

I was going through the Dec 08 passed paper and according to the question Harrisons has already made a LOSS of £ 44,130 in the accounts, after calculating his capital allowances we are requested to calculate his adjusted trading profit , and there are loads of expenses and depn that needs to be added to the loss figure above such as salaries , persona use of material etc. the total of additions comes up to £ 164,910. My question is : Shouldn't that figure increase the loss of the business?
Harrisons already has a loss of £ 44,130 + £ 164,910 expenses = so should it not his his total loss be the some of the two amounts less capital allowances ?
In the AAT suggested answers as well as the kaplan's revision answer booklet the expenses figures are deduced from the loss of the business?

Can anyone help me with this? Does anyone knows why?

Any help much appreciated.

Many thanks



  • Lyn32
    Lyn32 Registered Posts: 85 Regular contributor ⭐
    The loss of £44,130 you have to deduct that from the expenses and depreciation if you remember those items are added into the net profit when you calculate the taxable trading profit, but in this case the net profit is a loss, therefore need to be deducted from the addition of depreciation and expenses.

    So you end up with trading profit of £120,780 then less capital allowances after that you have a trading profit after capital allowances.

    I hope this will help.
  • mmro
    mmro Registered Posts: 21 New contributor 🐸
    hi Lym thanks a lot for your help
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