•  Required: 
• 
  
• (a) Explain the rationale for using the pool method to calculate depreciation for assets that cost less than $5,000 or have Adjusted Tax Value (ATV) of $5,000 or less. 
• 
  
•  (b) Calculate the depreciation loss for Lucky’s business for the income tax year ended 31 March 2022. Use the pool method where appropriate. Show all relevant workings.

Transcribed Image Text:

Lucky Kemp commenced a bakery business on 1 April 2021 and would like to claim maximum depreciation for the assets, which he purchased for his new business shown below. Asset Ovens Trays Slicing Machine Van Item Inland Revenue's depreciation rates Oven Trays Slicing Machine Van Date of acquisition 3 April 2021 10 April 2021 18 April 2021 21 June 2021 DV depreciation Rate (%) 10 40 13 20 Cost ($) 7 30 8.5 13 30,000 4,500 4,000 42,000 SL depreciation rate (%) Lucky Kemp commenced a bakery business on 1 April 2021 and would like to claim maximum depreciation for the assets, which he purchased for his new business shown below. Asset Ovens Trays Slicing Machine Van Item Inland Revenue's depreciation rates Oven Trays Slicing Machine Van Date of acquisition 3 April 2021 10 April 2021 18 April 2021 21 June 2021 DV depreciation Rate (%) 10 40 13 20 Cost ($) 7 30 8.5 13 30,000 4,500 4,000 42,000 SL depreciation rate (%)

Answer rating: 100% (QA)

SOLUTION a The rationale for using the pool method to calculate depreciation for assets that cost less than 5000 or have an Adjusted Tax Value ATV of ... View the full answer