The following are all resident taxpayers. In each case, calculate the deduction available for the decline in value as well as any assessable income (if any) arising from the disposals during the 2017/18 tax year.

1) Hannah sold equipment from her factory on 31 May 2018 for $9,200. The equipment had originally cost $11,000 and was depreciated using the prime cost method using an effective life of 5 years. The opening adjustable value was $6,000 on 1 July 2017. The decline in value on Hannah’s other assets was $1,700

2) Joe sold office equipment from his law practice on 1 November 2017 for $600. The office equipment had an original cost of $1,800 but was added to the low value pool in 2015 when it became a low-value asset. The low-value pool had an opening balance of $3,500 and there were no additions to the pool during the year.

Answer rating: 100% (QA)

Answer 1 When depreciating asset is disposed there is need to make a balancing adjustment to take in... View the full answer