• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Add and deducting taxes and tax allowable depreciation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Add and deducting taxes and tax allowable depreciation

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 20, 2021 at 9:08 am #625897
    lavenite
    • Topics: 13
    • Replies: 5
    • ☆

    Hello professor,

    I’m a bit confused about the questions that involve FCF calculations. Sometimes I see taxes being deducted to arrive at FCF. Sometimes I see tax allowable depreciation added, then taxes deducted, followed by tax allowable depreciation deducted. I can’t seem to figure out why different questions treat tax and tax allowable depreciation differently. Could you please explain why?

    Thanks!

    June 20, 2021 at 12:40 pm #625913
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49603
    • ☆☆☆☆☆

    The tax is calculated on the operating cash flows less the TAD. However the TAD is not a cash flows. So either calculate the tax separately and then put it with the cash flows, or alternatively in the cash flows subtract the TAD, then calculate the tax outflow, then add back the TAD because it is not a cash flow.

    This is what we always did for Paper FM. However there is one extra thing in Paper AFM in that if the investment is in a foreign country (as it often is in AFM questions) then there might be losses in which case we do not make the tax saving (as we do when the investment is in the same country) and the tax needs to be calculated separately and any losses are carried forward when calculating the tax payable.

    If you watch my free lectures on investment appraisal (and if necessary my free Paper FM lectures on investment appraisal with tax) I do explain all of the above with examples.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • ben920331 on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Viktoriia.Yanchuk on The Statement of Financial Position and Income Statement (part d)
  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy