Manuals - Activity 1
Asset 1: Building
Step 1: Calculate recoupment
Selling price limited to cost R 500 000
Less tax value R 1 875 000
Cost R 2 500 000
Less allowances (2 500 000 x 5% x 5) R -625 000
Scrapping loss R -1 375 000
Buildings do not qualify for a scrapping loss.
Step 2: Calculate proceeds
Proceeds R 500 000
Step 3: Calculate base cost (VDV plus post 2001 expenditure)
Valuation date value
Proceeds 500 000
Expenditure 2 500 000
Proceeds less than expenditure, therefore use para 27
Market value 5 000 000
Proceeds exceed market value, therefore VDV is the lower of:
Market value 5 000 000
Time apportionment base 1 125 000
Therefore use MV R 1 125 000
Post 2001 expenditure
Post 2001 exp (832 000+ 67 500) R -
Base cost (3 112 207+3 000) R 1 125 000
Capital loss (proceeds less base cost) R -625 000
Asset 2: Shares
Proceeds (500 x 1 000) R 500 000
Less base cost (400 x 1 000) R -400 000
R 100 000
Asset 1 - buildings R -625 000
Asset 2 - shares R 100 000
Capital loss carried forward R -525 000
,Part b
Capital gain R 800 000
Capital loss carried forward R -525 000
Net gain R 275 000
Inclusion rate 80.0%
Taxable gain R 220 000
, Go-go
Step 1: Calculate proceeds
Proceeds R 12 500 000
Step 2: Calculate base cost (VDV plus post 2001 expenditure)
Valuation date value
Proceeds 12 500 000
Expenditure (1 235 000+ 832 000 + 67 500 + 133 500) 2 268 000
Proceeds exceed exepnditure, therefore use para 26
Market value 14 000 000
Proceeds are lees than market value, therefore VDV is Proceeds less post 2001 exp
Proceeds 12 500 000
Post 2001 exp (832 000 + 67 500) 899 500
VDV 11 600 500
Base cost (11 600 500+899 500) R 12 500 000
Capital gain (proceeds less base cost) R -
Asset 1: Building
Step 1: Calculate recoupment
Selling price limited to cost R 500 000
Less tax value R 1 875 000
Cost R 2 500 000
Less allowances (2 500 000 x 5% x 5) R -625 000
Scrapping loss R -1 375 000
Buildings do not qualify for a scrapping loss.
Step 2: Calculate proceeds
Proceeds R 500 000
Step 3: Calculate base cost (VDV plus post 2001 expenditure)
Valuation date value
Proceeds 500 000
Expenditure 2 500 000
Proceeds less than expenditure, therefore use para 27
Market value 5 000 000
Proceeds exceed market value, therefore VDV is the lower of:
Market value 5 000 000
Time apportionment base 1 125 000
Therefore use MV R 1 125 000
Post 2001 expenditure
Post 2001 exp (832 000+ 67 500) R -
Base cost (3 112 207+3 000) R 1 125 000
Capital loss (proceeds less base cost) R -625 000
Asset 2: Shares
Proceeds (500 x 1 000) R 500 000
Less base cost (400 x 1 000) R -400 000
R 100 000
Asset 1 - buildings R -625 000
Asset 2 - shares R 100 000
Capital loss carried forward R -525 000
,Part b
Capital gain R 800 000
Capital loss carried forward R -525 000
Net gain R 275 000
Inclusion rate 80.0%
Taxable gain R 220 000
, Go-go
Step 1: Calculate proceeds
Proceeds R 12 500 000
Step 2: Calculate base cost (VDV plus post 2001 expenditure)
Valuation date value
Proceeds 12 500 000
Expenditure (1 235 000+ 832 000 + 67 500 + 133 500) 2 268 000
Proceeds exceed exepnditure, therefore use para 26
Market value 14 000 000
Proceeds are lees than market value, therefore VDV is Proceeds less post 2001 exp
Proceeds 12 500 000
Post 2001 exp (832 000 + 67 500) 899 500
VDV 11 600 500
Base cost (11 600 500+899 500) R 12 500 000
Capital gain (proceeds less base cost) R -