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AFMCapital allowances on reducing basis question

JJoseph8y ago
Dear All, Let's assume our CFs from the project are(pre-tax): CF0=-5400 CF1=1250 CF2=1400 CF3=1600 CF4=1800 Realizable value after 4th year(after tax) = 1500 Capital allowances on reduced basis are 25%, tax=30% Year Ann.WDA Written-down Value 0 0 // 5400 1 5400*0,25=1350 // 4050 2 4050*0,25=1012,5 // 3037,5 3 3037,5*0,25=759,375 // 2278,125 4 2278,125*0,25=569,53125 // 1708,59375 As the after-tax realizable value is 1500 and my written-down value is 1708,59375 the difference(208,59375) is added to WDA4(569,53125+208,59375)=778,125? Next question if for CF1 the WDA(1350)>pre-tax CF1(1250) my NCF is 1250 as there is no tax? Year 0 1 2 3 4 CFs before WDA/tax -5400 1250 1400 1600 1800 less WDA -1350 -1012,5 -759,375 -778,125 Tax profit 387,5 840,625 1021,875 Tax 30% 116,25 252,1875 306,5625 Realiazable value 1500 NCF -5400 1250 1283,75 1347,8125 2993,4375 Let me know if I am right, thanks for all the help and happy easter to everyone! Joseph
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