Chapter 12 - Part Disposals

Question 1

Basics

Answer 1

When selling part of an asset, we only take a deduction for part of the original cost

Question 2

Formula

Answer 2

A/(A+B) x cost
A = gross disposal proceeds
B = value of the part retained

Question 3

Note

Answer 3

Gross disposal proceeds = proceeds before any expenses of sale are deducted

Question 4

Interaction with Enhancement Expenditure

Answer 4

If enhancement expenditure has increased the value of the whole asset, but part of the asset has been sold, it cannot be deducted.
If enhancement expenditure has been specifically incurred on the part of the asset actually sold, it can be deducted.