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The calculating balancing allowance, balancing charge and capital gain the terms are most import to know every commerce background student.
A balancing allowance is a type of capital allowance which can be given under several of the allowance codes when an asset is disposed of or the business comes to an end.
| SI # | Cost Price $ | WDV $ | Sales Proceeds $ | Amount | Comment |
| A) | $ 90,000.00 | $ 60,000.00 | $ 50,000.00 | $10,000.00 | Balancing Allowance |
A balancing charge is the opposite of a capital allowance, which reduces the amount of profit you have to pay tax on.
| SI # | Cost Price $ | WDV $ | Sales Proceeds $ | Amount | Comment |
| A) | $ 90,000.00 | $ 60,000.00 | $ 50,000.00 | $10,000.00 | Balancing Allowance |
| B) | $ 90,000.00 | $ 70,000.00 | $ 80,000.00 | $(10,000.00) | Balancing Charge, Capital Gain Nill |
Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period.
| SI # | Cost Price $ | WDV $ | Sales Proceeds $ | Amount | Comment |
| A) | $ 90,000.00 | $ 60,000.00 | $ 50,000.00 | $10,000.00 | Balancing Allowance |
| B) | $ 90,000.00 | $ 70,000.00 | $ 80,000.00 | $(10,000.00) | Balancing Charge, Capital Gain Nill |
| C) | $ 90,000.00 | $ 70,000.00 | $100,000.00 | $(30,000.00) | Balance Charge, Capital Gain $10,000.00 ($100000-$90000) |
| A) | Bank (Sales) | $ 50,000.00 | |||
| Accu. Dep. | 90000-60000 | $ 30,000.00 | |||
| Loss on Sales | $ 10,000.00 | ||||
| Machinery | $ 90,000.00 | ||||
| B) | Bank (Sales) | $ 80,000.00 | |||
| Accu. Dep. | 90000-70000 | $ 20,000.00 | |||
| Machinery | $ 90,000.00 | ||||
| Gain on Sales | $10,000.00 | ||||
| C) | Bank (Sales) | $100,000.00 | |||
| Accu. Dep. | 90000-70000 | $ 20,000.00 | |||
| Machinery | $ 90,000.00 | ||||
| Gain on Sales | $ 30,000.00 |
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