QUESTION: 65

Which THREE of the following statements are true?

Tax depreciation replaces accounting depreciation when calculating the taxable profit.
Tax depreciation increases the taxable profit.
Balancing allowances increase the taxable profit.
Balancing charges increase the taxable profit.
Balancing charges reduce the taxable profit.
Balancing allowances reduce the taxable profit.

Answer(s): A,D,F

DE purchased an asset on 1 January 20X1 for $60,000 with a useful economic life of six years and a residual value of $3,000.
DE uses straight line depreciation for this asset.
On 31 December 20X3 the asset has a value in use of $ $28,000 and a fair value of $26,000.
Which of the following values should be used for the asset in DE's statement of financial position as at 31 December 20X3?

$28,000
$26,000
$30,000
$31,500

Answer(s): A

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QUESTION: 67

ST has $20,000 of plant and machinery which was acquired on 1 April 20X0. Tax depreciation rates on plant and machinery are 20% reducing balance. All plant and machinery was sold for $12,000 on 1 April 20X2.
Calculate the tax balancing allowance or charge on disposal for the year ended 31 March 20X3 and state the effect on the taxable profit.

A balancing allowance of $800 will increase taxable profits.
A balancing allowance of $800 will reduce taxable profits.
A balancing charge of $800 will increase taxable profits.
A balancing charge of $800 will reduce taxable profits.

Answer(s): B

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QUESTION: 68

CORRECT TEXT
XY purchased a building on 1 April 20X1 for $300,000 with a useful economic life of 30 years. On 1 April 20X7 the building was revalued at $525,000.
What will the new depreciation charge be following the revaluation? Give your answer as a whole number.

$21875

Answer(s): A

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