Question 4 - Topic 6 ( Small Business Concessions & Depreciating Assets) - Workshop Solutions 2021 PDF

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Newcastle Business School

ACFI3004 TAXATION 2021 Year

Solutions for Workshop Questions

ACFI3004

Page 2

Taxation

WORKSHOP 6: SMALL BUSINESS CONCESSIONS & DEPRECIATING ASSETS

Answer 14.6 (Textbook) Depreciation of furniture: 1 July 2020 to 30 June 2021; prime cost method  $5,000 x 365/365 x 100%/10 = $500 Depreciation of filing cabinets: 1 July 2020 to 30 June 2021; prime cost method  $1,200 x 365/365 x 100%/10 = $120 Low value pool: Note, only assets that have been depreciated under the diminishing value (DV) method can be added to the low-value pool: s 40-425(5). Consequently, the furniture and filing cabinets are ineligible to be added to the pool as they are being depreciated using the prime cost method. 

Decline in value of the low-value pool: Step 1 Low-cost assets x 18.75%  Printer purchased: 18.75%

$700

x $131.25

Step 2 Second element costs relating to the low-value assets added to the pool x 18.75%  Nil Step 3 Multiply the closing pool balance for the previous year and the opening adjustable value of low-value assets $1,987.50 added to the pool by 37.5%  Closing pool balance at 30 June $337.50 2020: $5,300 x 37.5%  Low-value assets added to the pool (computer): $900 x 37.5% Step 4 Sum of amounts from steps 1, 2 and 3 equals the decline in value for 2020-21:

ACFI3004 Taxation - 2021 Year - Solutions for Workshop Questions

$2,456.25

ACFI3004

Taxation

Page 3

ADD8 (a) Opening Pool balance

$282,000 x 30%

84,600

Additions (costing $30,000 or more)

$38,000 x 57.5% (higher due to COVID stimulus package - normally 15%)

21,850

General Fencing1 Asset write-offs (costing...