Busines tax computation

Trish

The depreciation charge shown on the p/loss a/c for a client includes the net book value of assets that have been written off in the accounts. Is this the figure (depreciation charge for the year plus the n.bv. of the assets written off) that I should deduct from the net profit in the tax computation or should I just deduct the depreciation charge? I would be very grateful for some advice on this query.

Regards Trish

burg

The disposal of the assets needs to be transferred to a disposals account in the profit and loss. The proceeds from the disposal (if any) then needs to be transferred to the same disposal account. This will then be removed when calculating the adjusted profit.

Further...

Sorry reading your post again I think you are saying my explanation above has been done but, everything is in a deprecation account? In which case the NBV of the disposed assets and the proceeds should be transferred to a disposals account and then adjusted for when calculating the adjusted profit.

Trish

Business tax computation

Dear Burg

Thank you for your reply to my thread. The way that my p/l a/c is arranged it lumps together the figures for n/c`s 8004 and 8005, which I think means that the n.b.v. of the disposals is already posted to the disposals a/c. Does that mean that I just deduct the depreciation charge for the year from the net profit and not the n,b,v, of the dispsosed assets? Sorry if I am being thick, but I do want to get this right and understand it.

Thanks again

Trish

Bluewednesday

You need to deal with the disposal to get the profit/loss from the disposal and it is this that is deducted from the net profit in the tax comp.