Accounting writedown2/2/2024 ![]() This original cost of £4,000 will also form the basis of 4% write down claims in subsequent APs. The cost of the notional original asset will have been £4,000, and the 10% amortisation of £400 will have to be corrected to a 4% write down of £160 in the AP to 31 December 2014. This means that a change will be needed to the amortisation that has been claimed in respect of D. If a fixed rate election is made in respect of D alone, it is necessary to identify notional original assets corresponding to A, B, C and D, and make the appropriate adjustments. ![]() FRS 102 is adopted for the AP to 31 December 2015, and as a result the asset is disaggregated into resultant assets A, B, C and D with tax values of £1,800, £2,100, £3,300 and £3,600 respectively. No fixed-rate election was made in respect of it, and allowable amortisation of £1,200 for the period (assuming written down at 10% per year) was claimed as a tax deduction. ExampleĪn original asset cost £12,000 in the AP to 31 December 2014. The appropriate portion is the part of the total accounting value of the resulting assets that the resulting asset represents. each notional original asset has attributed to it an appropriate portion of every amount that was taken into account for the original asset.the original asset is treated as if at all material times it had consisted of notional original assets that correspond to the resulting assets.The effect of the election recognises that the resulting asset was part of a bundle of assets originally recognised as a single asset. Election in respect of resultant assetsĪn election for fixed rate writing down may be made in respect of a resulting asset if it is within the time limit for making such an election in respect of the original asset. It disaggregates the asset into two assets with values of £6,000 and £3,000 respectively.Įach asset is treated as subject to a fixed rate election from the 31 December 2015 with starting costs of (£6,000 / £9,000 x £9,600) = £6,400 and (£3,000 / £9,000 x £9,600) = £3,200. In the AP to 31 December 2015, the company adopts FRS 102. In the same period the accounts amortisation is £1,000 giving a closing accounting value of £9,000. In the AP to 31 December 2014 the fixed-rate write off allowable for tax is £400, giving a tax written down value at the end of the AP of £9,600. A 4% fixed rate election is made in respect of it. ExampleĪn asset is bought in the AP to 31 December 2014 for £10,000. They are treated as being subject to a 4% election from the start of the later accounting period (AP), taking their cost as their tax written down value at the end of the earlier accounting period. If the original asset was subject to a fixed rate election - see CIRD12905 - then each one of the resulting assets is deemed to also be subject to a fixed-rate election.
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