SECTION 4 Q & A ANSWERS TO MOCK EXAMQUESTIONS 1 (A) MARK KETT –...

50,300

WDA – 18%

(9,054)

(198) 9,252

–––––––

–––––––

–––––––

WDV carried forward

41,246

902 34,252

Tutorial notes

(1) The cost of the lorry will have originally been added to the pool, so the

disposal proceeds are now deducted.

(2) The private use of the motor car purchased on 4 May 2012 is irrelevant,

since such usage will be assessed on the employee as a benefit. As it is not

a low emission car, it does not qualify for a FYA.

(3) As the computer is being treated as a short life asset, it has not been

allocated any of the AIA.

(ii)

Corporation tax computation for the year ended 31 December 2012

£

Trading profit

186,598

Property business profit (working)

11,570

Interest

430

–––––––

TTP

198,598

Corporation tax

£198,598 x 20%

39,720

–––––––---

Working

– Property business profit

£

£

Rent receivable (7,200/3 = 2,400 × 8)

19,200

Decorating 6,200

Advertisements 1,430

––––––

(7,630)

Property business profit

11,570

(iii) 

An 

election 

to 

treat 

the 

new 

computer 

as 

a 

short‐life 

asset 

must 

be 

made 

within 

two years 

of 

the end of 

the 

accounting 

period, 

i.e. 

by 31 

December