John purchased new machinery for his small business factory on 1st June 2018 for $8,000

Taxation Jun 24, 2020

John purchased new machinery for his small business factory on 1st June 2018 for $8,000. The effective life of the machinery is determined to be five years. John sold his old business machinery for $4,000 on 31 August 2019. John used this machinery 90% for business purposes. With reference to the relevant legislation and case law, discuss the tax consequences arising from the disposal of the old machinery under the prime cost method