1.6 (ii) Long-life assets

Question 1

What are Long Life Assets (LLA)?

Answer 1

Long life assets are assets with a predicted useful life of a least 25 years

Question 2

When are items not treated as long-life assets? (re: expenditure)

What is the result of that?

Answer 2

Where total expenditure in the accounting period on such assets does not exceed £100,000.

The asset is treated as a standard piece of plant and machinery and normal WDA are available at a rate of 18%.

Question 3

Re: £100,000 expenditure;

• what happens for short APs? re: LLA
• what happens for the number of 51% group companies?

Answer 3

The limit is adjusted for short accounting periods. (SEE: PAGE 53 (P2 STUDY MATERIAL) QUESTION 13.3) Please note for this question the AIA limit is £1m from 1 Jan 2019 to 31 Dec 2021 and £200,000 from 1 Jan 2022.

The limit is adjusted for the number of 51% group companies

Question 4

Does a LLA remain a LLA when it passes from seller to buyer?

Answer 4

If a asset has been treated as a LLA by the seller, the buyer will also have to treat the asset asa LLA. ONCE A LONG LIFE ASSET, ALWAYS A LONG LIFE ASSET.

Question 5

Which pool are LLA taken into? And what is the WDA?

Answer 5

LLA are taken into the SRP and given writing down allowances at 6% on a reducing balance basis.

Question 6

• What are Long Life Assets (LLA)?
• When are items not treated as long-life assets? (re: expenditure)
• Re: £100,000 expenditure, what happens for short or long APs? re: LLA
• Does a LLA remain a LLA when it passes from seller to buyer?
• Which pool are LLA taken into? And what is the WDA?

Answer 6

• Long life assets are assets with a predicted useful life of a least 25 years.
• Where total expenditure in the accounting period on such assets does not exceed £100,000.
• The limit is adjusted for short or long accounting periods. (SEE QUESTION 13.3 IN FOLDER)
• If a asset has been treated as a LLA by the seller, the buyer will also have to treat the asset asa LLA. ONCE A LONG LIFE ASSET, ALWAYS A LONG LIFE ASSET.
• LLA are taken into the SRP and given writing down allowances at 6% on a reducing balance basis.