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Example 2 – Roll-overs
Milk Ltd purchased a new manufacturing machine on
1 June 2014 at a cost of R200 000. On 1 July 2015 the
machine was destroyed in a fire. The company
received R250 000 from its insurer as compensation.
Milk Ltd purchased and started using a more
advanced new replacement manufacturing machine
on 1 September 2015 at a cost of R300 000. Milk Ltd
has a 31 December year-end.
Determine the effect of the above
transaction on Milk's taxable income
for the 2015 year of assessment.
