Will the annual depreciation allowance for the Hyundai sedan

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Question - Sweet Eats is the registered business name of a business that bakes and sells cakes. Commercial accounts for the business list among the assets composing the business one Hyundai sedan used in the management of the business.

Scenario One: X and her husband own the company Food Co Pte Ltd ('Foodco'). Foodco owns the business known by the business name Sweet Eats. X is the managing director of Foodco. A contract of employment between Foodco and X provides that in addition to salary X will be provided with a motor vehicle for her private use after hours.

The company's Hyundai sedan is used by X during the day in managing the company's business. After hours X uses the car for private purposes. X's after hours use of the car is authorized by the company in satisfaction of the company's obligation under the contract of employment.

Scenario Two: X owns the business known by the business name Sweet Eats. (X in other words is a sole trader. Amongst other things this means the assets composing the business are owned by X.)

X uses the Hyundai sedan during the day in managing the business. After hours X uses the car for private purposes.

(i) Who will claim depreciation for the Hyundai sedan in the two different scenarios?

(ii) Will the annual depreciation allowance for the Hyundai sedan have the same dollar value in the two scenarios? Provide brief reasons for your answer.

Reference no: EM132728956

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