Tx notes fa22 Final

 
Example 2 
Ml Ltd bought a painting on 1 April 2000 for £10,000. The painting was damaged on 1 May 2023 
when it was worth £50,000. After the damage it was only worth £25,000. On 1 July 2023 insurance 
proceeds of £30,000 were received but were not used to restore the painting.
Indexation factor from April 2000 to December 2017 is 0.549.
Calculate the chargeable gain arising on the receipt of the insurance proceeds 
 
Example 3 
Daisy Ltd purchased a painting on 1 April 2000 for £10,000. The painting was damaged on 1 May 
2023 when it was worth £50,000. After the damage it was worth £40,000.
On 1 July 2023 insurance proceeds of £8,000 were received. All of the insurance proceeds were 
used to restore the painting.
Assuming Daisy Ltd elects for the proceeds to be rolled over against the cost of the painting, 
calculate the base cost of the painting on a future disposal. 
A
A + B

---

153
Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
June 2023 to March 2024 exams
Watch free ACCA TX lectures
2.2. Destroyed or lost assets 
(a)
If an asset is destroyed or lost and no compensation or insurance money is received there is a 
disposal which will result in a capital loss. 
If there is any compensation or insurance monies received this will normally be brought into an 
ordinary gains computation as proceeds.
(b)
The date of disposal is the date the insurance money is received. If the insurance money is 
used to buy a replacement asset within 12 months, the gain can be deferred until the new 
asset is sold.
(c)
If only part or the insurance money is used to buy a replacement asset then some of the gain 
will be taxed immediately and some of the gain will be deferred.