Business Tax Practice CBA Question

Craig9

Another question for the GURU's

Task 1.7 answers to do with capital allowances shows AIA allowed for the machinery and furniture, which I agree with. Once you take off the max £50,000 you are left with £4635. The answer has put this straight into the general pool and calculated WDA for it.

I kept it in the first column and calculated the FYA 40% since the data you are dealing with is for the year ended 30 Nov 2009. The accounts are therefor 01 dec 08 - 30 nov 09 FYA is allowed on qualifying expenditure 1st April 09 - 31 March 2010.....

The person who has created the question has not taken the FYA dates into consideration. The question would be a lot more helpful if it gave dates of the additions as I suppose it could have been purchased 1 dec 08 - 31 march 09. Surely you couldn't be marked down for having to make your own decision on when the capital items were purchased in the year....

What's peoples thoughts? Did anyone else come across this?

Craig9

As per title - the online practice cba

Craig9

I think I've figured this out now, they have taken AIA against the machinery in full and then taken it against the furniture which left £4635 but it doesn't qualify for FYA as it's not plant/machinery? Correct?

keane155

Do you have the Obsborne workbook for the business tax CBA? I think the practice assessment two matches the online CBA. The workbook answer shows a 40% FYA on the 4635 (take off FYA 40% @ 1854). I'm sure my college teacher said there was an error on the online exam capital allowances question so that was probably it (I can't find the handout thing though that we were given).

Craig9

That's what I originally thought (take off the FYA) but the Kaplan book says FYA is only for plant and machinery and not F&F's.

Craig9

In fact, no, I would definitely do it the same way again and take off the FYA as I thought F&F's, Motor Vehicles and Computer Equipment were all considered under the title plant and machinery....

awatson86

Thats what I thought too. Has it been confirmed as an error? If so, I think it's disgraceful really.

Terdoo

Btc

I think if you read the question very well, the FYA 40% does not apply because it relate to 2008 rules, The 40% would only applies to the current year 1/04/2009 to 31/3/2010

hope this helps

Craig9

I don't see where it says 2008 rules, can you please explain? That would also be pretty useless as a practice question for the new CBA's since all the exams are for 2009/10 rules and you are not taught the previous rules in the textbooks.

Nikdoug

I think you're right that the wording is wrong (or in this case non existent). I had a question just like this in my CBA where part of the year was in the period qualifying for FYA, but they did state the months in which the items were purchased.

Craig9

Hopefully they give the months in the exam then, I would be fine with that. I've noticed they do that in the two 2010 past papers at Technician level.

Terdoo

Re Btc

Craig9 wrote: »

I don't see where it says 2008 rules, can you please explain? That would also be pretty useless as a practice question for the new CBA's since all the exams are for 2009/10 rules and you are not taught the previous rules in the textbooks.

Hi Craig,

My tutor said the company fixed asset information year ended in 30 November 2008 and the balance brought forward was fron 1 December 2007, therefore 40% Fya does not applies it only apply from 1/04/09 to 31/3/2010.

Iam just going with what my tutor said.

Can someone explain why

Craig9

That's probably correct but the paper online is for the year ended 2009 and not 2008.

Craig9

The online practice has now been updated with dates for capital allowances additions...someone was listening..

Plus there are less boxes on the adjusted trading profit question, so that's a bit less confusing as to where to put your adjustments.