Answered: 16-During the tax year 2019/20, John…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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16-During the tax year 2019/20, John received total proceeds of £90,000 from the disposal of his estates which he purchased for £40,000. He incurred incidental costs of disposal worth £5,000 and a capital loss of £10,000 from the disposal of his vehicles in the tax year 2018/19. Calculate the amount of capital gain tax, as per the UK tax laws. a. £10,000 b. £4,500 c. None of the options d. £2,300

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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