Question

ered of On 20 June 2020, Tamara's Toffee Apples Pty Ltd spent $20,000 on a new commercial refrigerator. (Effective life is 8 years and the fridge was used exclusively for business purposes, starting 20 June 2020) The maximum depreciation allowable for the 2019/20 tax year is: (Remember, this is a leap year) Etion Select one: None of these options are correct $75 $5,000 e $150 $2,500

Answer 1

The answer to this questione is done on the assumption that the tax period is commencing from 01/07/2019 and end on 30/06/2020.

The correct answer is USD 75 and the computation is below:

Cost of new commercial refrigerator (in USD) (a)	20,000.00
Effective date of commencement of depreciation (b)	20/06/2020
Commencement date of tax year ('c)	01/07/2019
End date of current tax year (d)	30/06/2020
Number of days in this tax year (e)= (d)-('c)	366 days
Number of days for which depreciation is to be computed (f) = (d) -(b)	11 days
Effective life (g)	8 years
Percentage of depreciation in a year (1 divided by 8 years in %) (h)	12.50%
Depreciation for an year (i) = (a)X(h)	2,500.00
Depreciation for the tax period 2019/20 = (j) = (i)x((f)/(e)), i.e 2,500x(11/366)	75