Question
Mr Mupambari entered into a 5 year lease agreement with Mr Zvakabatana, the owner of some piece of property, to lease Bambana building. The lease
Mr Mupambari entered into a 5 year lease agreement with Mr Zvakabatana, the owner of some piece of property, to lease Bambana building. The lease agreement was to run from January 2019 to December 2023. The property would be used for business purposes. One of the conditions of the lease was to effect some improvements on the building at an agreed value of $510 000. Due to hyper inflationary pressures Mr Mupambari discovered that the cost of the improvements would be eight times the agreed cost as it mirrored the inflation rate. He informed Mr Zvakabatana of the expected cost and they agreed that the new estimated cost would be that which took into account the prevailing environment. The agreement on the revised cost was made before completion of the improvements. The improvements were completed at the end of April 2019 at the revised agreed amount. Mr Mupamabri started using the premises in August 2019.
Given the above information you are required to calculate the income to be taxed in MrZvakabatanas hands and the deduction to be enjoyed by Mr Mupambari in: 2019 [13]
2020
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