HI6028 Taxation Theory, Practice & Law Tutorial Questions

Question 2 (7 marks)

Ajay Ltd purchased a depreciating asset with the value of $5,000 on 31 March 1989. On the same day, the company paid $50 to transfer the ownership. One year after, on 31 March 1990, this company spent an additional $1,500 for the asset functionality improvement. Later, on 31 March 1992, the company moved to a new place, and paid $200 to transfer this asset to the new location of business. Finally, the asset was sold in 2020 for $12,000 (Ignore GST effect in all calculations of this question).
Calculate cost base, and capital gain (Loss), and capital gain tax, if any, considering Ajay decided to index (if applicable) and the relevant corporate tax rate is 30%.
(You can use your presentation slides for indexation, if required, and round to two decimals only, only use tables and no narration format is allowed, otherwise, the answer would not be marked).
(7 marks. Word limit: minimum 120 to maximum 150 words)