Holmes Pty Ltd acquired a machine from its parent company for $500,000 on 1 January this year. The market value of the machine at that time was $300,000. The parent company has owned the machine for three years and calculated its depreciation deductions using the prime cost method and an effective life of eight years. Calculate the decline in value of the machine for Holmes this income year. Assume that it is not a leap year and Holmes is not a small business entity. Holmes sold the machine to an unrelated party for $40,000 on 1 December this year. Advise Holmes of its tax consequences on disposal of the machine

Holmes Pty Ltd acquired a machine from its parent company for $500,000 on 1 January this year. The market value of the machine at that time was $300,000. The parent company has owned the machine for three years and calculated its depreciation deductions using the prime cost method and an effective life of eight years. Calculate the decline in value of the machine for Holmes this income year. Assume that it is not a leap year and Holmes is not a small business entity. Holmes sold the machine to an unrelated party for $40,000 on 1 December this year. Advise Holmes of its tax consequences on disposal of the machine

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets

Section: Chapter Questions

Problem 1CP

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