Caputal allowances (5 marks) In December 2005 IPL purchased a new vat for storing oil imported from Italy. The vat, which has an effective life of 20 years, cost $50,000 to purchase and $5,000 to install. IPL does not know which method to use and asks you to advise it using both methods what the capital allowance for the new vat would be

Required.: Calculate the capital allowance using both methods