CGT 31 Compensation for Assets Damaged Flashcards

1
Q

Compensation received when an asset is damaged represents ….

A

a part disposal of the asset

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2
Q

If the asset is restored, the amount spent is treated as …..

A

enhancement expenditure on eventual disposal of the asset in the normal way

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3
Q

If all the compensation is used to restore the asset……

A

a ‘rollover’ claim can be made to avoid the part disposal. The proceeds received are deducted from the base cost carried forward

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4
Q

The claim is also possible if the amount of compensation retained is ……

A

small (being not more than the higher of £3,000 or 5% of the compensation received).

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5
Q

If the amount of compensation retained is not small…..

A

a partial claim can be made.

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6
Q

A part disposal calculation is done for the cash retained using the formula:

A

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.

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