Red tape and Reducing balance: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Expand definition - source - Wikipedia - https://en.wikipedia.org/wiki/Red_tape)
 
imported>Doug Williamson
(Make branding consistent)
 
Line 1: Line 1:
''Regulation and compliance''.
1.
Red tape is a colloquial and derogatory expression for excessive regulation.


A basis of allocating costs or allowances across successive time periods by applying a consistent periodic percentage charge to - for example - the reducing net book value of a fixed asset.


Historically, administrators used red tape to bind up the most important documents that required urgent or higher-level attention in the administration.
 
For example,
a fixed asset has a cost of $12m, to be depreciated on a reducing balance basis at a rate of 40% per year.
 
The depreciation charge for Year 1 would be
 
$12m x 40%
 
= $4.8m.
 
 
The net book value at the end of Year 1 (and the start of Year 2)
 
= 12 - 4.8
 
= $9.2m.
 
 
The depreciation charge for Year 2
 
= $9.2m x 40%
 
= $3.68m.
 
 
The net book value at the end of Year 2 (and the start of Year 3)
 
= 9.2 - 3.68
 
= $5.52m.
 
And so on.
 
Using a reducing balance basis of depreciation, the net book value never falls to zero (unless the asset is disposed of).
 
 
2.
 
''UK tax.''
 
UK Writing Down tax Allowances are normally available to be claimed on a reducing balance basis.




== See also ==
== See also ==
* [[Administration]]
* [[Depreciation]]
* [[Compliance]]
* [[Straight line]]
* [[Deregulation]]
* [[Sum of the digits]]
* [[Red herring]]
* [[Writing down allowance]]
* [[Regulation]]
* [[Retained EU law]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]

Revision as of 15:00, 26 November 2014

1.

A basis of allocating costs or allowances across successive time periods by applying a consistent periodic percentage charge to - for example - the reducing net book value of a fixed asset.


For example, a fixed asset has a cost of $12m, to be depreciated on a reducing balance basis at a rate of 40% per year.

The depreciation charge for Year 1 would be

$12m x 40%

= $4.8m.


The net book value at the end of Year 1 (and the start of Year 2)

= 12 - 4.8

= $9.2m.


The depreciation charge for Year 2

= $9.2m x 40%

= $3.68m.


The net book value at the end of Year 2 (and the start of Year 3)

= 9.2 - 3.68

= $5.52m.

And so on.

Using a reducing balance basis of depreciation, the net book value never falls to zero (unless the asset is disposed of).


2.

UK tax.

UK Writing Down tax Allowances are normally available to be claimed on a reducing balance basis.


See also