Question 1

Section A

AgriCorp Ltd granted a 21-year lease on a piece of agricultural land to a tenant farmer. AgriCorp Ltd received a premium of £60,000 upon the grant of the lease, in addition to annual rent.

What amount of the premium will be assessed as property income for AgriCorp Ltd in the year the lease is granted?

Accepted Answer

Use the property income premium formula: P x (51 - n) / 50, where P is the premium and n is the number of years of the lease.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the capital gains element instead of the property income element.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 2

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