Page 47 - F1 Integrated Workbook STUDENT 2018

Corporate Income Tax and Capital Tax Computations

A balancing charge will be added back to the accounting profit and a balancing
allowance will be deducted from the accounting profit, when computing the taxable
profit.

The tax proforma could then be expanded to include the effect of the asset disposal
as follows:

Trading Income
$
Accounting profit X
Less: income exempt from tax or taxed
under other rules
Add back: disallowable expenses X
Less: disallowable/exempt income (X)
Add: accounting depreciation X
Add: accounting loss on disposal of an X
asset
Less: accounting profit on disposal of an (X)
asset
Less: tax depreciation (X)
––
Taxable profit X
––
Capital allowances (tax depreciation) are not normally given in the year
of disposal of the asset – these are replaced by balancing allowances
or charges

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