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Hello,
My question is about capital allowance. After making the adjustment in the profit to get the tax adjusted profit for taxation, what figure should appear on the balance sheet in the tax return? Is it right to deduct the capital allowance instead of depreciation in the balance sheet of the tax return
No – we are preparing tax computations and in accounting you prepare financial statements – if you look at the notes and listen to the lectures you will see that for tax purposes we do not allow depreciation in computing the taxable profit of the business and we replace it with capital allowances.- this is an adjustment to the accounting profit to establish the taxable profit for inclusion in the tax computation
Tax computations are separate from the financial statements
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