CGT 31 Compensation for Assets Damaged Flashcards
Compensation received when an asset is damaged represents ….
a part disposal of the asset
If the asset is restored, the amount spent is treated as …..
enhancement expenditure on eventual disposal of the asset in the normal way
If all the compensation is used to restore the asset……
a ‘rollover’ claim can be made to avoid the part disposal. The proceeds received are deducted from the base cost carried forward
The claim is also possible if the amount of compensation retained is ……
small (being not more than the higher of £3,000 or 5% of the compensation received).
If the amount of compensation retained is not small…..
a partial claim can be made.
A part disposal calculation is done for the cash retained using the formula:
A/(A + B) × Original cost/Enhancement expenditure
A = compensation retained
B = restored value of the asset
The remainder of the compensation that was spent on restoration can be rolled over.