Forum Replies Created
- Posts
Oh wait, my bad. Ive wrongly calculated the difference between terminal value and residual value which gives a negative 9296, hence a bal allowance. (tax relief). Silly mistake 🙁 So sorry sir!
Hi Sir, with respect to your latest reply. I have managed to figure out 9296. However, I am confused about some parts. The residual value at Yr 4 is 1055. The terminal value is 1250. In this case, you mentioned terminal value is similar to scrap value. If we deduct 1250 from 1055, we would get 9296, and this is amount should be a balancing charge since the sales proceed is greater than the residual value. Therefore, the tax PAYABLE(since it is a bal charge) is 9296 is 9296*30*= 2789, so you should deduct it to cash flows instead of adding it. But the answer given by ACCA showed otherwise, which is a tax relief?? Please help clear my confusion!