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I got the answers :
1/ No, companies do not benefit from AEA, but they benefit from indexation allowance.
2/ Yes, the terms chargeable gains and taxable gains are interchangeable.Thanks for ignoring my questions.
Written resolutions are issued to the shareholders in lieu of holding a formal shareholders’ meeting in order to vote upon the issue mentioned in the resolution.
We needed to compare between cash of $1,000 in 8 years and the ordinary shares in 7 years. How would you compare these two, given that number of years are different?
Break-even Sales Revenue ($) = Fixed Costs / Contribution % p.u
= $ 1, 232,000 / (100% – 44%)
= $ 2, 200, 000 <<————–Margin of Safety = (Current Sales – Break-even Sales) / Current Sales * 100%
= [ ( 200,000 * $15) – $ 2,200,000 ] / ( 200,000 * $15) * 100%
= $800 / $3,000,000 * 100%
= 26.67% <<————–N.B :-
Variable Costs/ Sales Ratio = 44%
Therefore, Sales = 100%, and Variable Costs = 44% of Sales
As such, Contribution = 56% of Sales (since Sales = VC + Contribution)D $24,400 (Current tax for the year=$16,000 + Increase in Deferred tax provision=$8,400)
But maybe the question is not complete, because I wonder what to do with the corporate tax rate of 25%.
Sir please confirm..
