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Doric co (12)

This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.

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August 25, 2022 at 5:05 pm #664253
Frooti
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Why they have considered dep as we do not take dep while calculating value of company?
August 26, 2022 at 7:33 am #664294
John Moffat
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The question says that there is an annual reinvestment needed to keep operations at the current levels that is equivalent to the TAD. I do stress this point in my free lectures as being a very common thing for the examiner to state.
August 26, 2022 at 4:56 pm #664338
Frooti
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Yes, but we do not consider investment for tax purpose but in this case, they have taken dep and are considering it for tax purpose as well.
August 26, 2022 at 5:58 pm #664357
John Moffat
Keymaster
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The TAD is allowable for tax and so is taken into account when calculating the tax.
It is not a cash flow, but the same amount is spent on maintaining operations and this is a cash flow.
Have you watched my lectures where I explain this??
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