AZA Ltd is considering the purchase of a machine for R2 750 000, which would be sold after seven years for an estimated realisable value of R1 200 000. By this time capital allowances of R2 150 000 would have been claimed. The rate of corporation tax is 28%. Required What will be the tax payment on the balancing charge at the end of the five years? a. R182 000 b. R322 000 c. R168 000 d. R84 000
AZA Ltd is considering the purchase of a machine for R2 750 000, which would be sold after seven years for an estimated realisable value of R1 200 000. By this time capital allowances of R2 150 000 would have been claimed. The rate of corporation tax is 28%.
Required
What will be the tax payment on the balancing charge at the end of the five years?
| a. |
R182 000 |
|
| b. |
R322 000 |
|
| c. |
R168 000 |
|
| d. |
R84 000 |
In accountancy, machine is a form of asset and is reported under the asset side of the balance sheet. Machine falls under the category of fixed asset. Here, a fixed asset is one which has a useful life of more than one year. Depreciation expense is charged on the fixed asset and it reduces the book value of a fixed asset over its useful life. Depreciation expense is a form of non-cash expenditure and is reported under income statement.
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