Document ID: chunk:federal_register_of_legislation:C2004C01190:clause:2_201
Version: federal_register_of_legislation:C2004C01190
Segment Type: clause
Provision Reference: sch 2 cl 201
Character Range: 129815–131157

201  Subsection 20‑40(2) (example)
Repeal the example, substitute:

Example: At the start of the 2002‑03 income year, a company incurs $100,000 to start to hold a depreciating asset. The company uses the prime cost method, and the effective life is 10 years. $10,000 is deductible for the 2002‑03 income year and for each of the following 9 income years under section 40‑25.

 In the 2002‑03 income year, the company receives $20,000 as recoupment. How much is assessable for the 2002‑03 income year?

 Applying the method statement:

 After step 1: the total assessable recoupment is $20,000.

 After step 2: the recoupment already assessed is nil.

 After step 3: the unassessed recoupment is:
total assessable recoupment minus recoupment already assessed,
i.e. $20,000 minus 0 = $20,000.

 After step 4: the total deductions for the loss or outgoing are $10,000.

 After step 5: the outstanding deductions are:
total deductions for the loss or outgoing minus recoupment already assessed, i.e. $10,000 minus 0 = $10,000.

 After step 6: the unassessed recoupment (step 3) is greater than outstanding deductions (step 5), so the amount of the outstanding deductions is included in assessable income, i.e. $10,000.

 Applying the method statement to the 2003‑04 income year: a further $10,000 is included in the company's assessable income.