A company purchased a state of the art computer system including servers, laptops, PC's and ultra-fast...
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A company purchased a state of the art computer system including servers, laptops, PC's and ultra-fast backup drives from a supplier in Miami for $200,000 United States Dollars (USD) in the current year of assessment. The items were landed and installed at the taxpayer's place of business at an additional cost of $10,000 (USD) for a total cost of $210,000 (USD). The exchange rate at the time the system was installed and used - January 1st, 2016 - was $80 Jamaican Dollars (JMD) to $1 (USD). He made full payment for the item four months later when the exchange rate was $100 (JMD) to $1 (USD). The exchange difference calculated on this transaction (if any) was correctly treated from an accounting perspective. In error, none of the capital allowances relevant to the item were computed. Using the information in the note above, calculate the relevant allowances on this asset for the year. A tabular format is not required. Please show all workings - and clearly state any assumptions made on the lines provided below. (5 marks) A company disposed of an asset - used in the direct manufacture of primary products - during the current year after 5 years of productive use inclusive of the current year of assessment. The cost of the asset was $1,000,000. The disposal may be treated as occurring on the last day of the current year for convenience. Disposal proceeds amounted to $250,000. The company wishes to utilize all of the allowances due over the 5 years in this current year of assessment and has obtained the permission of the Revenue to include all of the capital allowances in the calculation of this current year's tax liability. The company has elected to utilize the new capital allowance rules. Using the information in the note above, calculate the relevant allowances which would have accrued on this asset over the 5 year period. You are also required to calculate the balancing item (if any) on the disposal of the asset in year 5. A tabular format is not required. Please show all workings- and clearly state any assumptions made - on the lines provided below. (5 marks) A company purchased a state of the art computer system including servers, laptops, PC's and ultra-fast backup drives from a supplier in Miami for $200,000 United States Dollars (USD) in the current year of assessment. The items were landed and installed at the taxpayer's place of business at an additional cost of $10,000 (USD) for a total cost of $210,000 (USD). The exchange rate at the time the system was installed and used - January 1st, 2016 - was $80 Jamaican Dollars (JMD) to $1 (USD). He made full payment for the item four months later when the exchange rate was $100 (JMD) to $1 (USD). The exchange difference calculated on this transaction (if any) was correctly treated from an accounting perspective. In error, none of the capital allowances relevant to the item were computed. Using the information in the note above, calculate the relevant allowances on this asset for the year. A tabular format is not required. Please show all workings - and clearly state any assumptions made on the lines provided below. (5 marks) A company disposed of an asset - used in the direct manufacture of primary products - during the current year after 5 years of productive use inclusive of the current year of assessment. The cost of the asset was $1,000,000. The disposal may be treated as occurring on the last day of the current year for convenience. Disposal proceeds amounted to $250,000. The company wishes to utilize all of the allowances due over the 5 years in this current year of assessment and has obtained the permission of the Revenue to include all of the capital allowances in the calculation of this current year's tax liability. The company has elected to utilize the new capital allowance rules. Using the information in the note above, calculate the relevant allowances which would have accrued on this asset over the 5 year period. You are also required to calculate the balancing item (if any) on the disposal of the asset in year 5. A tabular format is not required. Please show all workings- and clearly state any assumptions made - on the lines provided below. (5 marks)
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Answer rating: 100% (QA)
1 The relevant allowances on this asset for the year are Capital allowances on ... View the full answer
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
Posted Date:
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