# Business tax help

Registered Posts: 9 Regular contributor ⭐ ? ⭐
Hello everyone, i need help with a quick question from osborne textbook. It's question 2.2 from practice assessment 2.

Travelers Ltd sold a valuable picture for £12,000 in april 2012. This was bought for £4000 in August 2000. the indexation factor from August 2000 to April 2012 was 0.442.

Complete the following computation:

Proceeds:
Cost:
Indexation allowance:
Gain:
chattel exemption:

I have my business exam on Monday, so I hope someone can help.

Thanks

• Registered Posts: 144 ? ? ?

Hi
I Think
£
Proceed 12000

Less Cost (4000)

Indexed (4000 *0.442) (1768)
Gain 6232

Chattel (12000 -6000)/5*3 10000
I hope this helps
• Registered Posts: 144 ? ? ?
Hi Caff

the answers given is based on FA 2011, therefore, not sure what the chattel exemption for FA12 is.
:ohmy:
• Registered Posts: 9 Regular contributor ⭐ ? ⭐
Thank you for the answer Terdoo, that's what i thought it was as well. But according to answer in the back of the book it is:

Proceeds: 12,000
Cost; 4,000
Index: 1,688
Gain: 6,312
Chattel exemption: 10,000

Does anyone know how they got this answer?

Thank you again for you help
• Registered Posts: 782
Morning,

The problem is the indexation factor. You have written 0.442 in the original OP, but the answer from the book looks like it has used 0.422 (1688/4000=0.422). Either you've copied it down wrong, or the answer in the book is calculated on the wrong indexation factor.