(Disposal of depreciating assets)

Required: The following are all resident taxpayers. In each case, calculate the deduction available for decline in value as well as any assessable income (if any) arising from the disposals during the 2017/18 tax year.

1. Trevor sold shop fittings from his retail store on 31 October 2017 for $3,700. The fittings had originally cost $5,600 and were depreciated using the diminishing value method using an effective life of 10 years. The opening adjustable value was $4,000 on 1 July 2017. The fittings were originally purchased in 2010/11. Decline in value on Trevors other assets was $15,000.

Trevor deduction for decline in shop fitting value:

4000/10*2*4/12 = 267.00

( 4000 - 267.00 ) 3,700 = 33

Add : Other assets = 15,000

Total = 15,300

b) Hannah sold equipment from her factory on 31 May 2018 for $9,200. The equipment had originally cost $11,000 and was depreciated using the prime cost method using an effective life of 5 years. The opening adjustable value was $6,000 on 1 July 2017. Decline in value on Hannahs other assets was $1,700.

Depreciation on equipment for 11 months (1/1/17 31/5/18) is:

Prime Cost Calculation - $11,000 / 5 years x 1112 x 100% = $2017

Balancing Adjustment Opening Value $6,000

Less Depreciation $2,017

Value of equipment at 31/5/18 $3,983

Less Sale price of equipment $9,200

Profit on sale of equipment $5,217

Total deductions that can be claimed are:

Depreciation $2,017

Decline in value of other assets $1,700

Total Deductions $3,717

Less Profit on Sale of equipment $5,217

Total Assessable Income $1,500

c) Joe sold office equipment from his law practice on 1 November 2017 for $600.The office equipment had an original cost of $1,800 but was added to the low value pool in 2015 when it became a low value asset. The low value pool had an opening balance of $3,500 and there were no additions to the pool during the year.

Small business pool $3,500 x 30% = $1,050

Sale of assets in pool do not result in a balancing adjustment of the pool, it just reduces the balance of the pool.

Therefore the deduction to claim is: $1,050

Thats all my working for all parts ,can you check if my working are right or not