Question 4 [10] Dick Bird carries on a manufacturing business as a sole trader. He had to expand the production capacity of his business. After all options were investigated his financial advisor advised him to lease the adjacent plot and to conclude a lease agreement with his neighbour. In terms of a lease between Dick Bird (the lessee) and the owner-lessor, a taxpayer, a plot of land was leased by him for 20 years from 1 April 2011. Dick Bird is a VAT vendor and you may assume that all amounts exclude VAT where applicable. The lease agreement provides for: ⚫a rental of R800 a month, payable from completion date; • a lease premium of R96 000 to be paid on 1 April 2011; and ⚫ an industrial building to be erected on it at a cost of R1 920 000. The industrial building was duly erected at a cost of R2 400 000. It was completed on 31 August 2011 and brought into use on the same date. YOU ARE REQUIRED TO calculate the amounts to be deducted, arising from the above lease agreement, in calculating Dick Bird's 2012 taxable income.
Question 4 [10] Dick Bird carries on a manufacturing business as a sole trader. He had to expand the production capacity of his business. After all options were investigated his financial advisor advised him to lease the adjacent plot and to conclude a lease agreement with his neighbour. In terms of a lease between Dick Bird (the lessee) and the owner-lessor, a taxpayer, a plot of land was leased by him for 20 years from 1 April 2011. Dick Bird is a VAT vendor and you may assume that all amounts exclude VAT where applicable. The lease agreement provides for: ⚫a rental of R800 a month, payable from completion date; • a lease premium of R96 000 to be paid on 1 April 2011; and ⚫ an industrial building to be erected on it at a cost of R1 920 000. The industrial building was duly erected at a cost of R2 400 000. It was completed on 31 August 2011 and brought into use on the same date. YOU ARE REQUIRED TO calculate the amounts to be deducted, arising from the above lease agreement, in calculating Dick Bird's 2012 taxable income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
not use ai please
![Question 4 [10]
Dick Bird carries on a manufacturing business as a sole trader. He had to expand the production capacity of his business. After all
options were investigated his financial advisor advised him to lease the adjacent plot and to conclude a lease agreement with his
neighbour.
In terms of a lease between Dick Bird (the lessee) and the owner-lessor, a taxpayer, a plot of land was leased by him for 20 years from
1 April 2011. Dick Bird is a VAT vendor and you may assume that all amounts exclude VAT where applicable.
The lease agreement provides for:
⚫a rental of R800 a month, payable from completion date;
• a lease premium of R96 000 to be paid on 1 April 2011; and
⚫ an industrial building to be erected on it at a cost of R1 920 000.
The industrial building was duly erected at a cost of R2 400 000. It was completed on 31 August 2011 and brought into use on the same
date.
YOU ARE REQUIRED TO calculate the amounts to be deducted, arising from the above lease agreement, in calculating Dick Bird's 2012
taxable income.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdd6d950-92bb-453e-a12d-0cfaf8443d96%2F09ce7ea2-af8f-4821-924b-7a92132ec160%2F9vjr95t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 4 [10]
Dick Bird carries on a manufacturing business as a sole trader. He had to expand the production capacity of his business. After all
options were investigated his financial advisor advised him to lease the adjacent plot and to conclude a lease agreement with his
neighbour.
In terms of a lease between Dick Bird (the lessee) and the owner-lessor, a taxpayer, a plot of land was leased by him for 20 years from
1 April 2011. Dick Bird is a VAT vendor and you may assume that all amounts exclude VAT where applicable.
The lease agreement provides for:
⚫a rental of R800 a month, payable from completion date;
• a lease premium of R96 000 to be paid on 1 April 2011; and
⚫ an industrial building to be erected on it at a cost of R1 920 000.
The industrial building was duly erected at a cost of R2 400 000. It was completed on 31 August 2011 and brought into use on the same
date.
YOU ARE REQUIRED TO calculate the amounts to be deducted, arising from the above lease agreement, in calculating Dick Bird's 2012
taxable income.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education