(b) Advise on the capital gains implications should Trent Limited’s old building be sold a

Question

(b) Advise on the capital gains implications should Trent Limited’s old building be sold as proposed. Support your

advice with relevant calculations. (4 marks)

Answer 1

正确答案：

 

This gives a higher post-entry loss of ￡50,000 (150,000 – 100,000) and so it is advisable for Trent Limited to make
this election.
The ￡100,000 of pre-entry losses are still available, but can only be set against gains on assets which:
(i) Trent Limited sold prior to being acquired (subject to the normal carry back restrictions), or
(ii) Trent Limited already owned when it was acquired, or
(iii) Trent Limited acquired from outside the group and used in its trade after being bought by Tay Limited.