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Is there any difference between depreciation (depn)and tax allowable depreciation (TAD)? In june 2014 question 2 ignored TAD in the investment side of the APV correction. In the same year question 3 finding the value of Ndege Co in the spin-off TAD was deducted. I am confused. Thanks a lot.
Yes – although the difference is not usually of relevance in the exam. Depreciation is the financial accounts depreciation, tax allowable depreciation is the capital allowances.
However, in the exam you are usually only given the latter.The reason it was ignored in June 2014 (although not ignored for the tax calculation) is that it was assumed that the investment needed in maintaining assets was equal to the depreciation (the examiners lists it in his list of assumptions)
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