BTX Osborne Mock 2

anniebabe

Hi Guys

Need a bit of help understanding Task 2.5 from the practice assessment 2 BTX FA2011 - if someone has time to answer.


A factory was bought by a sole trader for £400000 in Jan 2000, In October 2011, it was sold for £600000. In the same month another factory was bought for £550000. The amount of the gain that can be rolled over is?
Answer is £150000

How are they working it out? we only did this chapter briefly in class last week and I honestly cant remember what to do.

I got this far:-

Sale proceeds 600000
less cost (400000)
200000
rollover (200000)
gain nil
new purchase 5500000
less rollover (200000)
Base cost 350000

and now i am stuck - please help, many thanks.

Diddy Mau

Hi annie,

I think I have this right & it makes sense

as above rollover is £200,000
Original sold for 600,000 new purchased for 550,000
a difference of 50,000

since new asset is £50,000 less than original, this is lost from releif
200,000
(50,000)
150,000

1 Hope this helps
2 Hope I'm right, or I'm re-sitting this exam