CG14980 - Deferred consideration: unascertainable: example
FACTS
The vendor acquired the asset (goodwill) in April 2003 for 拢100,000.
The vendor sells the asset at arm's length to the purchaser on 30 April 2011.
The consideration is
- cash 拢500,000, plus
- the right to two payments of deferred consideration in cash, the amount depending on the profits of the business for the next two years.
The market value of the right to deferred consideration at the time of disposal is agreed by Shares and Assets Valuation at 拢300,000.
In September 2012 the vendor receives 拢220,000 in part satisfaction of the right to deferred consideration. The market value of the remainder of the right is agreed by Shares and Assets Valuation at 拢90,000.
In October 2013 the vendor receives 拢150,000 in full satisfaction of the remainder of the right to deferred consideration.
COMPUTATION
A: IMMEDIATE CHARGEABLE GAIN
Consideration received cash (500,000)听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听
听plus value of right (300,000)听听听听听听听听听听听听听听听听听 听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听拢800,000
Less Cost听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听拢100,000
CHARAGEABLE GAIN听听听 2011-12听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听拢700,000
听
B:听WHEN DEFERRED CONSIDERATION RECEIVED
听
September 2012
Consideration听听听听听听听听 听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听拢220.000
Minus 听听Apportioned cost听 300,000x220,000
听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 (220,000+90,000)
Chargeable Gain 2012-13听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 听 拢7,097
Consideration听听听听听听听听听听听听听听听听听 听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听拢150,000
Less Cost听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 300,000-212,903听 听 听 听 听 听 听 听 听 听 听 听听听 听 听拢87,097听听听听听听听听
CHARGEABLE GAIN 2013-14听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听拢62,903听听听听听听听听听
听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听 听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听听
There are more examples where the asset sold is shares or debentures in CG58000+
听