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Hi Mr Moffat.
I’ve seen u have addressed this question before. Could u plz tell me why the depreciation charge 18.75 is not added back as usually is the case once we are done calculating the tax.
Which exam was the question in? (I cannot remember the name of every question in every exam 🙂 )
However, it will be because the current examiner always assumes (and usually states in the question) that an amount equal to the depreciation is needed to be spent in order to maintain the assets, so although the depreciation I self is not a cash flow, there is an equal cash flow used to maintain the assets. I do explain this in my free lectures.
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