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Tax Depreciation Base & Tax Gain ( Loss) on Fixed Asset Disposal

Tax Depreciation Base & Tax Gain ( Loss) on Fixed Asset Disposal

There are four class types of tangible assets according to Cambodia Tax. Below are tax depreciation bases and gain (loss) for each class.

Class 1:

we use straight line method for tax Depreciation expense.
Tax Depreciation Base= Historical Costs + Purchase ( or construction) – disposal Historical Cost

Gain ( Loss ) on Fixed asset Disposal for Class 1 = proceeds from fixed asset disposal – tax net book value.

Net book value = cost – accumulated depreciation.

Please note that full tax depreciation expense in year purchase, but no tax depreciation in year disposal.

Class 2,3,4:

we use declining balance ( Reducing balance) method for tax Depreciation expense.
Tax Depreciation Base= beginning tax net book value + Purchase- proceeds from fixed asset disposal.

Gains ( Loss ) on Fixed asset Disposal for Class 2, 3 and 4 are as follows.

Case 1 : partial disposal for each class

If tax depreciation base > 0, then no loss ( or gain), so we will depreciate these assets onward.

If tax depreciation base < 0, then It is tax  gain for fixed asset disposal

Case 2 : Disposal for whole each class

If tax depreciation base > 0, then It is tax loss  for fixed asset disposal.

If tax depreciation base < 0, then It is tax  gain for fixed asset disposal.

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