Martin purchases a wine bar, to increase trade he spends $10,000 to replace the old doors and windows at the front of the bar with new glass bifold doors. The door and windows were dated and faded but in serviceable condition. Which of the following statements is correct?

Select one:

a. The $10,000 is not deductible as a repair under Section 25-10 ITAA97 as Initial repairs are not deductible as per Law Shipping Co v IR Commrs (1924) 12 TC 621

b. The $10,000 is not deductible as a repair under Section 25-10 ITAA97 as an item must need restoration before it can be repaired as per Case J47 (1958) 9 TBRD 244. It would however be deductible under the capital works provisions.

c. The $10,000 is deductible as a repair under Section 25-10 ITAA97.

d. The $10,000 is not deductible as a repair under Section 25-10 ITAA97 as a repair must restore an item to its previous condition as per Lurcott. It would however be deductible under the depreciating asset provisions.

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X Co Pty Ltd purchases a new machine at cost $80,000, the machine was acquired on the first day of the income year and has an effective life of five years.

What would the decline in value for year one be using the prime cost method?

Select one:

a. $80,000 x 0.5 x 20% = $8,000

b. $48,000 x 1 x 40% = $19,200

c. $80,000 x 1 x 20% = $16,000

d. $80,000 x 1 x 40% = $32,000