Assignment task:
Jack and Jill jointly own and run a bed and breakfast business. The business is run through their partnership, J & J Bed and Breakfast. Jack and Jill also own an investment property together which they purchased in equal proportions. During the year, they undertook the following transaction:
- Purchased furniture for their bed and breakfast business for $10,000 on 21 December 2005. The furniture is expected to last for 20 years.
Advise Jack and Jill of their income tax consequences arising out of the above information under both the diminishing value method and the prime cost method (if relevant) for the year ended 30 June 2017. Assume that the business does not qualify as a small business entity.