Simplified Depreciation Rules of New Purchased Business

 Author: WILLIAMW(Enthusiast)Enthusiast

7 Oct 2024

To whom it may concern,

A client has purchased an existing liquor shop business, and will set up a new company to take over the business. The contract purchase prices is $500k plus stock. It was estimated that among the contract price, $150k is for plant and equipment, and the balance $350k is goodwill.

Could you please advise the following:

1. It seems that on the contract, the plant and equipment list section does not have a value. It only list the plant and equipment including cool room, fridges, computers, security system and etc. Is it compulsory that the vendor need to provide details value amount for each item on the P&E list ?
2. What would be the best way to depreciation the P&E contained in the contract. If the client chooses to use Simplified Depreciation Rules, can he allocate the $150k plant and equipment to Small Business Pool, and depreciation at 15% in the first year, and 30% in later years. Does he have any other options ?
3. If the client chooses to use Small Business Pool under Simplified Deprecation rule, and later he purchased a fridge at $2,500 in FY2024. Can the fridge be instantly written off, or allocating to the small business pool. Can the client has the option ?
4. If the client purchased a MV of $70k in FY2024. Can the client choose to use the Diminishing Method instead of the Simplified Depreciation rules ? What is here I want to ask is that is the Simplified Depreciation rule on asset by asset basis, or once elected, you need to apply it to all the assets.

Some clarification here would be really appreciated.

Thanks very much

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