Question
On 1 August 2022, Capricorn Holdings Pty Ltd acquires a property (consisting of a large block of land and a commercial office building) for an
On 1 August 2022, Capricorn Holdings Pty Ltd acquires a property (consisting of a large block of land and a commercial office building) for an amount of $5.8 million.
The company engaged a quantity surveyor to determine the breakdown of the costs relating to the property. The quantity surveyor's report reveals the following cost information.
| Cost of Land | $ 1 200 000 |
| Demolition of old building on site (April 2015) | $ 40 000 |
| Pre-construction site clearance (May 2015) | $ 170 000 |
| Construction of new building (August 2015) | $ 2 600 000 |
| Landscaping (March 2017) | $ 32 000 |
The company leased the commercial office building to tenants on 22 August 2022. It was rented out to tenants from 22 August 2022 to 30 June 2023 inclusive.
Required: Calculate Capricorn Holdings Pty Ltd's deduction for capital works expenditure(Division 43) for the year ended 30 June 2023. Please quote appropriate sections of the ITAA (1997) in your answer. Please round all calculations to the nearest whole dollar.
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Managerial Accounting Tools for business decision making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
5th edition
470506954, 471345881, 978-0470506950, 9780471345886, 978-0470477144
