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Question 4 1 Point Nicholas is a retailer who had $57,000 of trading stock on hand at the start of the current income year
Question 4 1 Point Nicholas is a retailer who had $57,000 of trading stock on hand at the start of the current income year. This stock was valued at cost. He purchased $120,000 of trading stock during the year and had sales of $190,000 in trading stock during the year. On 30 June 2020 he had $69,000 in trading stock valued at cost. Assuming that Nicholas values his trading stock at cost for tax purposes at the year end, what amount should he include as taxable income for the current year? A 108,000 B $12,000 C) $82,000 D $202,000
Expert Solution
Soluation:-
(C) Capital gain amount to including taxable income of Nicholas during the current year = $ 82,000 /-
Compute the amount for including the taxable income of Nicholas during the current year:-
a) Compute sale amount of trade stock during current year at cost:-
| Particular | Amount |
|
Opening trade stock value for during current year Add:- Purchesed trade stock value Less:- Closing trade stock value |
$ 57,000 $ 1,20,000 $ 69,000 |
| Sales value of trade stock during the year at cost | $ 1,08,000 |
b) Compute capital gain value for including the taxable value of Nicholas during the current year:-
| Particular | Amont |
|
Sale consideration of trade stock Less: expensess on transfer |
$ 1,90,000 - |
|
Net Consideration Less: Sale value of trade stock at cost (or) cost of acquisition |
$ 1,90,000 ($ 1,08,000) |
| Net Capital Gain | $ 82,000 |
Capital gain amount for including the taxable income of Nicholas during the current year = $ 82,000
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