Question 3b
Acebook Ltd sold the following assets during the year ended 31 December 2011:
(1) On 10 March 2011 Acebook Ltd sold its entire shareholding of 50p ordinary shares in Oogle plc for £3·20 per share. The company had originally purchased 8,000 shares in Oogle plc on 28 June 2003 for £25,200.
On 31 October 2006 Oogle plc made a 2 for 1 bonus issue. Then, on 14 February 2008, Oogle plc made a 1 for 5 rights issue. Acebook Ltd took up its allocation under the rights issue in full, paying £4·30 for each new share issued.
| Indexation factors are as follows: | |
| June 2003 to October 2006 | 0·104 |
| June 2003 to February 2008 | 0·166 |
| June 2003 to March 2011 | 0·282 |
| October 2006 to February 2008 | 0·055 |
| October 2006 to March 2011 | 0·160 |
| February 2008 to March 2011 | 0·100 |
(2) On 30 June 2011 three acres of land were sold for £192,000. Acebook Ltd had originally purchased four acres of land, and the indexed cost of the four acres on 30 June 2011 was £196,000. The market value of the unsold acre of land as at 30 June 2011 was £53,000. During June 2011 Acebook Ltd spent £29,400 clearing and levelling all four acres of land. The land has never been used for business purposes.
(3) On 1 October 2011 an investment property owned by Acebook Ltd was destroyed in a fire. The indexed cost of the property on that date was £138,400. Acebook Ltd received insurance proceeds of £189,000 on 20 October 2011, and on 31 October 2011 the company paid £172,400 for a replacement investment property. Acebook Ltd has made a claim to defer the gain arising from the receipt of the insurance proceeds.
Required:
Calculate Acebook Ltd’s chargeable gains for the year ended 31 December 2011. (12 marks)