1. consider whether $ 18000 is a repair or capital improvement

2. S25-10 ITAA 97 - taxpayer can deduct expenditure on the repair of depreciating asset

3. capital improvement - FCT vs western suburbs

question 2.

a. explain what is the difference between cash and accrual basis bent vs FCT (1971)b decide which method do you think is suitable for holmes finance

B. Henderson VS FCT (1970)

considered as untaxed earnings s- when changing from cash to accruals method the uncollected fees earned in the prior year considered as untaxed earnings

question 3

office concerns pty ltd decided to replace the motor of its one of delivery van the original as the motor has been broken and needs to be replaced. they decided to replace it with a much more efficient engine to the cost $18000 it will only cost them $9500 if they replace it with exactly the same motor.

the $18000 cost is an allowable deduction.

question 4.

holmes financial services pty ltd is a financial and gold cost they employ approximately 45 peoples all over the offices up until 019, they assessed their income based on cost basis instead of accrual basis but because their transactions becoming more complex they decided to move to accrual basis.

a. do you think the ATO will accept their proposal to move to an accrual basis? why

B. if holmes financial services earned $325000 in FY 19 but haven't been received, what will be the treatment of that $325000.