Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Fubuki Co AFM
- This topic has 3 replies, 2 voices, and was last updated 9 months ago by John Moffat.
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- February 22, 2024 at 8:20 pm #700910
Sir, I have a silly doubt. Why is the non tax allowable depreciation on Premise (11 million) not taken into account in the answer? I understood the tax allowable depreciation bit but if there is non tax allowable depreciation, shouldn’t we include that prior to finding out our PBT and then not add that back as it is non tax allowable?
If somebody could answer this, it would be of great help!
Thanks in advance!
February 23, 2024 at 7:13 am #700932The TAD has been taken into account in working 1 when arriving at the tax charge.
There is nothing to add back because when arriving at the cash flows each year we have not subtracted the depreciation. If it had been subtracted (as we do in Paper FM) then it would need adding back.
However as I explain in my free lectures it is better in Paper AFM to show the tax calculation as separate workings (because in AFM there are sometimes tax losses which never happens in Paper FM).
February 23, 2024 at 5:31 pm #700974Thanks for the response sir, but my doubt was not relating to the TAD of the Machinery, but more so regarding the NON TAD of Premise. Shouldn’t we have to include that in our base case npv workings? i.e deduct depreciation of premise prior to arriving at PBT?
February 23, 2024 at 6:44 pm #700979Sorry, I read your post too quickly 🙁
The question only says that TAD is available on the plant and machinery. You cannot assume that it is available on the premises unless it had specifically mentioned it.
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