Sir my query is with regards to losses carried forward. In this question, the examiner has not appeared to carry losses forward.
Working three
The cashflow in year one are (600)
Tax allowable depreciation (12000)
Taxable flows(12600)
Tax @20% (2520)
Has the examiner applied tax over the losses as well?
Confused.
Thankyou
Ask the Tutor ACCA AFM
Allegro Technologies(ATC). 2010 exam paper
7y ago#1There were two exams in 2010 and neither of them has a question called Allegro Technologies
Sir this is from a sample paper of 2010.
The question can be found here as well:
xxx
My question is , are there two ways of dealing with tax losses. Carrying them forward or applying the tax rate in the same year?
thankyou
7y ago#3Please do not post links to pirate website - they are displaying this question illegally and the ACCA gets very upset about copyright issues.
If a company is making a new investment in the same country, then we always assume that the company is already making profits and therefore already paying tax. Therefore a 'loss' from the new project simply results in them making less profit overall and therefore results in a tax saving.
If, on the other hand, they are making a new investment in a different country, then the profits or losses in the other country are taxed separately. If there is a loss on the project then the loss is carried forward in the other country and reduces later profits (as per normal tax rules).
Please watch my free lectures on this because I explain the reasons in the lecture.
Sign in to reply to this topic.