Explain in detail using relevant tax laws and cases whether this amount of $70,000 is deductible for MJ limited.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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:

  1. Facts of the scenario
  2. Relevant laws and cases
  3. Application of laws and cases
  4. Conclusion
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