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Hi tutor,
Please explain how we will treat the situation if it is written
Depreciation expense for the last year was $6.2m and was calculated on reducing balance basis of 25% per year. This matches what is allowable for tax purposes.
What will be the tax allowable depreciation in the next year?
Kindly elaborate
ThanksAnd I want to ask that is index calculation is part of p4 syllabus
If so then please direct me to an online lecture
ThanksIf depreciation was 6.2M then the written down value before charging it must have been 6.2M / 25% = 24.8M.
So the written down value after charging it would be 24.8M – 6.2M = 18.6MTherefore next years depreciation is 18.6 x 25% = 4.65M
It depends what you mean by index calculation!
If you are meaning price indices, then calculation of them would certainly not be asked but I suppose they could be relevant somewhere (they are assumed knowledge from Paper F2).
If you want a lecture on them, then you can find one in the Paper F2 lectures.
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