accg924
Part A
(a)
Event A1 happens when Party Time sale the factory under s 104-10. In order to calculate the net capital gain or loss, we should follow the steps under s 100-50.
1. Calculate Party Time current year capital gains
2. Less current year capital losses of Party Time if there is
3. Less unapplied net capital losses for previous year of Party
Capital gain=capital proceeds- cost of base
Under s 116-20, the capital proceeds are the money or the market value of any property received in relation to a CGT event, or which the taxpayer is entitled to receive.
Under s110-25, cost base include several elements such as purchase price, incidental costs, the costs of ownership (for assets acquired after 20/08/1991), capital expenditure. More specifically, under s110-25(3), the incidental costs incurred to acquire the CGT asset or that relate to CGT event (for example, the disposal of a CGT asset).
In this case, Party Time entered into a contract to sell the factory for $2.35 million on
1 May 2014, so the capital proceeds is $2.35 million. The purchase price of factory is
$700000. Incidental costs include legal fees ($12000) which incurred to acquire factory and agent’s fee ($50000) which incurred to dispose factory. As a result, the total cost base equal to $700000 + $12000 + $50000 = $762000.
Net capital gain or loss for the year ended 30 June 2014
capital proceeds
$2,350,000
cost base
(762,000)
notional capital gain
1,588,000
less: capital loss for previous year
(60,000)
net capital gain
1,528,000
(b)
The issue here is whether the trading stock costing ($25000) which is still delivered until 30 June 2014 should be included in the balance of stock on hand as at 30 June 2014. We should consider whether 1) this trading stock is ‘on hand’ on 30 June 2014.
2)
The Party Time should add the trading stock costing $25000 in the balance sheet. Firstly, by the end of financial year the trading stock was on hand because the trading stock
(a)
Event A1 happens when Party Time sale the factory under s 104-10. In order to calculate the net capital gain or loss, we should follow the steps under s 100-50.
1. Calculate Party Time current year capital gains
2. Less current year capital losses of Party Time if there is
3. Less unapplied net capital losses for previous year of Party
Capital gain=capital proceeds- cost of base
Under s 116-20, the capital proceeds are the money or the market value of any property received in relation to a CGT event, or which the taxpayer is entitled to receive.
Under s110-25, cost base include several elements such as purchase price, incidental costs, the costs of ownership (for assets acquired after 20/08/1991), capital expenditure. More specifically, under s110-25(3), the incidental costs incurred to acquire the CGT asset or that relate to CGT event (for example, the disposal of a CGT asset).
In this case, Party Time entered into a contract to sell the factory for $2.35 million on
1 May 2014, so the capital proceeds is $2.35 million. The purchase price of factory is
$700000. Incidental costs include legal fees ($12000) which incurred to acquire factory and agent’s fee ($50000) which incurred to dispose factory. As a result, the total cost base equal to $700000 + $12000 + $50000 = $762000.
Net capital gain or loss for the year ended 30 June 2014
capital proceeds
$2,350,000
cost base
(762,000)
notional capital gain
1,588,000
less: capital loss for previous year
(60,000)
net capital gain
1,528,000
(b)
The issue here is whether the trading stock costing ($25000) which is still delivered until 30 June 2014 should be included in the balance of stock on hand as at 30 June 2014. We should consider whether 1) this trading stock is ‘on hand’ on 30 June 2014.
2)
The Party Time should add the trading stock costing $25000 in the balance sheet. Firstly, by the end of financial year the trading stock was on hand because the trading stock