Question 1

Section A: Objective Test

Omega Manufacturing Ltd prepares accounts to 30 September each year. During the year ended 30 September 2023, the company purchased a new ventilation system for its factory for £150,000. This qualifies as an integral feature. What is the maximum capital allowance Omega Manufacturing Ltd can claim on this expenditure in the year ended 30 September 2023?

Accepted Answer

Identify the type of asset (integral feature = special rate pool). Check the AIA limit (£1,000,000). Since the expenditure (£150,000) is well within the AIA limit, the company can claim 100% AIA on it to maximize allowances.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Applying the 6% WDA or 50% FYA without realizing that AIA provides a 100% deduction and is more beneficial.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 5

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