Wishing to diversify their business The Party Shop Pty Ltd, a party decoration shop which had stores
Question:
Wishing to diversify their business The Party Shop Pty Ltd, a party decoration shop which had stores around Australia, decided to sell their Adelaide store on 1 September 201W. The Adelaide store was estimated to have a current market value of $1,500,000 but was acquired in 1984 at a cost of $500,000.
Willing to obtain the best advantage possible, they decided to subdivide the store into 5 smaller shops and sell them individually. In March 201X the subdivision was completed at a total cost of $500,000 and all the stores were sold for a price of $1,000,000 each. However, on the 30.06.1X they had only received the payments regarding 3 of them.
Required
Advise the Party Shop Pty Ltd of the tax consequences arising from the sale of their Adelaide store. In your response ensure you state the appropriate legislation, tax rulings or common law cases to support your answer.
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas