Indexation of Disposal of shares Bus. Tax
anthony_12c
Registered Posts: 40 Regular contributor ⭐
Hi, i am struggling to understand how to arrive at a figure when looking at the part disposal of shares. Specifically Question 4.5 from the Osborne books for Business taxation, the figure concerns the disposal that occurs on the 1/1/2000, 5,000 shares that cost £14,167, but how do you arrive at the index cost of £16,384?
Other info:
Purchase 1/1/92 = 3,000 shares at £3.00 each
Purchase 1/1/95 = 12,000 shares at £3,50 each
Bonus issue on 1/1/99 1 to 5 basis therefore 3,000 shares
Disposal of 5,000 shares on 1/1/2000
I understand the answer until the indexation cost of the disposal, any help would be greatly appreciated.
Thanks
Other info:
Purchase 1/1/92 = 3,000 shares at £3.00 each
Purchase 1/1/95 = 12,000 shares at £3,50 each
Bonus issue on 1/1/99 1 to 5 basis therefore 3,000 shares
Disposal of 5,000 shares on 1/1/2000
I understand the answer until the indexation cost of the disposal, any help would be greatly appreciated.
Thanks
0
Comments
-
No of Shares Cost Indexed Cost
Purchase 3000 9000 9000
Indexation to 1995 9000 x 0.077 693
Sub Total 3000 9000 9693
Purchase 12000 42000 42000
Subtotal 15000 51000 51693
Bonus shares 3000
Subtotal 18000 51000 51693
indexation to 2000 51693 x 0.141 7289
Subtotal 18000 51000 58982
Disposal 5000 (51000/18000 x 5000) (58982/18000x5000)
= 14167 =163840 -
There were 3 distinct columns when I wrote that out. The first number on each line is Number of shares the second is cost, and the third is indexed cost. The figure £14167 is derived from (51000/18000 x 5000) and the indexed cost of £16384 from (58982/18000x5000).
Leona0 -
thanks for your reply, it really helped0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 319 NEW! Qualifications 2022
- 157 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 92 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 274 Tax
- 136 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership