Explain in detail using relevant tax laws and cases whether this amount of $70,000 is deductible for MJ limited.
Explain in detail using relevant tax laws and cases whether this amount of $70,000 is deductible for MJ limited.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
MJ Limited purchased a machinery for $50,000 for its operations on 1 October 2015 and have been using it for income producing activities. In the current financial year (2019-2020), the machinery broke down and it was replaced with another machinery with the cost of $70,000 which could improve(?) the production, a feature that was not available in previous machinery.
Explain in detail using relevant tax laws and cases whether this amount of $70,000 is deductible for MJ limited.
Kindly use the four sections of:
- Facts of the scenario
- Relevant laws and cases
- Application of laws and cases
- Conclusion
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