KKKM Stores incurred expenses of GH¢2,500.00 on repairs and improvement of Plant and Machinery and declared a profit of GH¢100,000.00 for the 2016 year of assessment. NB: The Written down value of the applicable pool before capitalising any excess is GHS 60,000.00. What is the new written down value of the applicable pool for Kabutey Stores? A. GH¢100,000.00 B. GH¢60,000.00 C. GH¢2,500.00 D. GH¢5,000.00 E. GH¢0.00
Question
KKKM Stores incurred expenses of GH¢2,500.00 on repairs and improvement of Plant and Machinery and declared a profit of GH¢100,000.00 for the 2016 year of assessment. NB: The Written down value of the applicable pool before capitalising any excess is GHS 60,000.00. What is the new written down value of the applicable pool for Kabutey Stores? A. GH¢100,000.00 B. GH¢60,000.00 C. GH¢2,500.00 D. GH¢5,000.00 E. GH¢0.00
Solution 1
The new written down value of the applicable pool for KKKM Stores can be calculated by subtracting the expenses incurred on repairs and improvement of Plant and Machinery from the written down value of the applicable pool before capitalizing any excess.
Given that the written down value of the applicable pool before capitalizing any excess is GH¢60,000.00 and the expenses incurred on repairs and improvement of Plant and Machinery is GH¢2,500.00, we can calculate the new written down value as follows:
New written down value = Written down value before capitalizing any excess - Expenses incurred on repairs and improvement of Plant and Machinery = GH¢60,000.00 - GH¢2,500.00 = GH¢57,500.00
Therefore, the new written down value of the applicable pool for KKKM Stores is GH¢57,500.00.
So, the correct answer is not provided in the options given.
Solution 2
The new written down value of the applicable pool for KKKM Stores can be calculated by subtracting the expenses incurred on repairs and improvement of Plant and Machinery from the written down value of the applicable pool before capitalizing any excess.
Given that the written down value of the applicable pool before capitalizing any excess is GH¢60,000.00 and the expenses incurred on repairs and improvement of Plant and Machinery is GH¢2,500.00, we can calculate the new written down value as follows:
New written down value = Written down value before capitalizing any excess - Expenses incurred on repairs and improvement of Plant and Machinery = GH¢60,000.00 - GH¢2,500.00 = GH¢57,500.00
Therefore, the new written down value of the applicable pool for KKKM Stores is GH¢57,500.00.
So, the correct answer is not provided in the options given.
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