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Hello sir,
Hopefully you are doing well,
I have a few questions although I have watched your lectures
1) when they mention let’s say “starting in 2 years time ”
Means we will discount at time=2 right ?
2)and in your lecture you said capital allowances is charged after 12 months, if tax payment is normal timing then we will charge capital allowance(to calculate tax saving) of 1st year at T=1 is that true ?Does that mean I assume that cash flows occur end of each year ?
Sorry I just get confused with the timings in the question sometimes ,can u pls tell me important points in timings ?
Thanks
1 If a flow is in 2 years time, then we discount the flow for 2 years.
2. I do not say that capital allowances are charged after 12 months. Capital allowances are calculated at the end of the accounting period. The tax saving that results either occurs immediately (if the question says that tax is payable immediately), or (more likely) it occurs 12 months after the end of the accounting period (if the question says that there is a one year delay in tax).
3. We always assume that operating cash flows occur at the ends of year, unless the question says differently.
I do suggest that you watch my lectures again, because I do explain all of these points in the lectures.
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