The company also needed to acquire a series of parts to hold as stock on hand. At the end of the year the company had closing stock of $146,000. Of this figure the directors believed that $85,000 represented obsolete stock and wished to write off this amount. The financial accountant had not done this in deriving the profit of $750,000 as he was unsure of how to account for it in the financial accounts. The obsolete stock had been scrapped at the end of the year and taken to a metal recycler. The company directors come to you as the taxation adviser of the company and wish to know how each of the items mentioned above are to be treated for taxation purposes

The company also needed to acquire a series of parts to hold as stock on hand. At the end of the year the company had closing stock of $146,000. Of this figure the directors believed that $85,000 represented obsolete stock and wished to write off this amount. The financial accountant had not done this in deriving the profit of $750,000 as he was unsure of how to account for it in the financial accounts. The obsolete stock had been scrapped at the end of the year and taken to a metal recycler. The company directors come to you as the taxation adviser of the company and wish to know how each of the items mentioned above are to be treated for taxation purposes

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 43P

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