CIMA Financial Reporting F1 Question # 52 Topic 6 Discussion

CIMA Financial Reporting F1 Question # 52 Topic 6 Discussion

F1 Exam Topic 6 Question 52 Discussion:
Question #: 52
Topic #: 6

KL has S90.000 of plant and machinery which was acquired on 1 June 20X4. Tax depreciation rates on plant and machinery are 20% reducing balance. All plant and machinery was sold for 560,000 on 1 June 20X6

Calculate the tax balancing allowance or charge on disposal tor the year ended 31 May 20X7 and state the effect on the taxable profit.


A.

A balancing allowance of $2,400 reduces taxable profit.


B.

A balancing charge of $2,400 reduces taxable profit.


C.

A balancing charge of $2,400 increases taxable profit.


D.

A balancing allowance of $2,400 increases taxable profit.


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