Untitled Flashcards Set

From accounting point of view, capital expenditure is taken to the profit and loss account in the form of depreciation. For Income Tax purposes depreciation as included in the profit and loss account does not automatically qualify as an allowable deduction. The part of capital expenditure which qualifies for deduction is specifically computed using any of the two methods available. The two alternative methods available for claiming depreciation 84 85 allowance on the capital cost of premises (normally limited to industrial premises) and equipment including those for non-subsistence farming are:  Single Asset Method  Pooling Method For the purposes of both single asset and pooling method, depreciable assets are classified into four groups and depreciation is calculated on a declining balance method:-