Cost of Assets

(Chapter Ref: Tax Depreciation, Amortization and Pre-Commencement Exp.)

Rules for the determination of cost of an asset.
Issue
Cost price

Cost Value
Consideration given
FMV of an assets given (in kind)
Expenditures for the acquisition and disposal of asset.
Other expenditures incurred to make the asset fit for its intended use.

Internally generated asset

Partial use of an asset for
business

Factory and administrative cost (Proportional basis)

For initial allowance total cost
For sale purposes add the inadmissible depreciation in the cost of the
asset.
The FMV at the time it is so applied

Personal asset used in the

business
Government rebate,
commission or grant etc.
Waiver of debt (payable)
relating to asset
Asset acquired by waiving loan
receivable (exchange of asset)
Exchange difference
Leased assets purchased
Co-ownership
Service charges included in
cost
Group of assets acquired in
single transaction

Reduce the cost or WDV of the asset.

Deduct from the cost or WDV
The value of the debt waived.
Adjust in the value of cost / WDV
Residual value or bargain price
Cost of each member shall be considered differently.
Not to be included
Cost shall be apportioned according to their FMV at the time of
acquisition.
Sale Price of Assets

Issue
Normal Case
Payment in Kind
Non-arms length transaction
Asset Destroyed
Sale by a leasing entity
Export of an asset
Immovable Property (when
sale price exceeds its cost)

Sale Value
Actual sale price or FMV (Higher)
FMV of the asset purchased
FMV at the time of disposal
Scape value + any compensation received
Residual value (subject to the condition that all lease payments are not
less than the original cost)
Original cost
The cost = SP