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BSTX AAT question on capital allowances

emilycarpenteremilycarpenter Registered Posts: 2
edited October 2017 in Business Tax
I am doing a capital allowance question from the sample assessment 2 on the AAT website. I think I must be wrong but I cannot understand the answer given by AAT!

My understanding is that for a Sole Trader, if you dispose of an asset that is in it's own pool - this pool must then be reduced to nil value to c/f. In this question an opening balance is given for a car, this is then disposed of during the year. In my answer I have then gone on to put in a 'balancing allowance' to reduce this column to nil - the AAT have not.

Thank you for any help in advance! I have put a screen shot below to help explain :)

Comments

  • Adele69Adele69 CambridgeAAT Student Posts: 320
    From what you've said that's what I would do as well. Certainly if the business was closing all assets would be sold and balancing allowance used to zero the accounts and would think for owners assets sold at the end of a period, I notice it says Sales Manager so guessing this is a Company not a Sole Trader.

    I've had to deal with mistakes in Osborne and BPP practice assessments but think it's less likely on an AAT posted PA on study support.

    Would need to see the detail of the question and as an aq2013 student I cant see aq2016 material, we only had 1 practice assessment for FA2016 and I barely managed 60% on it but still passed come exam day. Maybe other BTAX students will have more after the weekend, been a few post on BTAX lately
  • PeterCPeterC Registered, Tutor Posts: 152
    The Sales Manager's car should be in the special rate pool, even though it is the only item in that pool. The special rate pool only gets a balancing allowance when the business ceases trading.
    Adele69
  • emilycarpenteremilycarpenter Registered Posts: 2
    @Adele69 @PeterC
    The question states 'Marcus is a Sole Trader and has the following information... etc'
    He is not ceasing trade, but I thought that if an asset had been de-pooled it should then get a balancing allowance / charge when the item is then disposed off

    Thank you
  • PeterCPeterC Registered, Tutor Posts: 152
    By "de-pooling" I believe you mean that the relevant item has been placed in a single asset pool (CA23210). This has not happened to the Sales Manager's car, which should be in the special rate pool. It just so happens that there is only one asset in the special rate pool. You might be thinking that this car should be in a single asset pool because of the private use but that would only apply if it was used privately by the proprietor. The Sales Manager is an employee. This is a common cause of confusion for AAT students, which your examiner likes to exploit.
  • melissachinmelissachin Registered Posts: 1
    Hi, please can someone explain part (a) of this question?

    I thought you just had to time apportion for the 10 month period so 200,000 x 10/12 = 166,667
  • fournaanjezfournaanjez Registered Posts: 32

    Hi, please can someone explain part (a) of this question?

    I thought you just had to time apportion for the 10 month period so 200,000 x 10/12 = 166,667

    While it is a short period and you'd be correct to pro-rate it, the annual investment allowance for up until 31 December 2015 was £500,000.

    This means for the question they qualify for 1 month of £500,000 (1/12 x £500,000) and 9 months of £200,000 (9/12 x £200,000) giving a total of £191,667.

    Hope this helps.
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