Question
Green House Ltd, a housing developer, commenced its operation on 25 July 2016 and closes its accounts to 30 April annually. Below are the non-current
Green House Ltd, a housing developer, commenced its operation on 25 July 2016 and closes its accounts to 30 April annually. Below are the non-current assets owned by the company as at 1 May 2019:
Assets | Cost | Date of Purchase |
Office equipment | $84,000 | 14 March 2016 |
Heavy machinery | $360,000 | 6 November 2016 |
Passenger car | $105,000 | 19 March 2018 |
The following transactions occurred during the year ended 2020:
1. The company purchased new machinery on 17 August 2019 for $180,000,
including $25,000 for installation. Before the installation, $28,000 was incurred
for levelling land to prepare site for the installation.
2. The heavy machinery was traded in on 10 December 2019 for a new, advanced
machine. The new heavy machinery costs $500,000. The accepted trade in value
for the old machine was $148,000.
3. The passenger car was provided for the Managing Director of the company. On 12
January 2020, the car was sold for $62,000.
A new passenger car was purchased on hire purchase basis, based on the following
Terms:
Hire purchase price | $280,000 |
Cash price | $250,000 |
Deposit (paid on 12 January 2020) | $10,000 |
No. of monthly instalment | 60 |
First instalment due on | 15 Feb 2020 |
It was agreed by the IRB that of the car usage (both cars) was for the Managing Directors personal purpose.
4. A television and a projector were purchased on 1 March 2020 for $3,400 and $1,200, respectively. They are for office use.
Required: Determine the capital allowance, balancing allowance and/or balancing charge (if any) for Green House Ltd. for all the relevant years of assessment up to the year of assessment 2020
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