Reece Suesue commenced a business on 1 April 2021 and for the year ended 31 March 2022, he would like to claim maximum depreciation for the following assets that he purchased for his new business.

Asset	Date of acquisition	Cost ($)
Recording equipment	4 April 2021	1,500
Radio telecommunication	11 May 2021	2,000
Decking machine	9 April 2021	18,000
Micro-processor machinery	20 May 2021	42,000

Inland Revenue’s depreciation rates

Item	DV depreciation Rate (%)	SL depreciation rate (%)
Recording equipment	48	36
Radio telecommunication	28	23.5
Decking machine	20	18
Micro-processor machinery	25	22

Required:

1. Explain to Reece with appropriate reasoning how he can maximize his depreciation loss deduction.
2. Calculate the depreciation loss for Reece’s business for the income tax year ended 31 March 2022. Use the pooling method where appropriate. Show all relevant workings

Answer rating: 100% (QA)

Answer Calculation of Depreciation under Diminishing ValueDV and Straight Line Met... View the full answer