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Sir, I would like to clarify few points in the lecture.
1) Is it necessary to show the tax allowable depreciation the calculate tax and then deduct the tax allowable depreciation? Would it be OK to show the tax allowable depreciation in workings like in FM paper?
2) The amount which is required for maintenance of non current assets is deducted from cash flows. Wouldn’t it bring tax reductions as well?
Thanks
1. You would show the calculation of the tax depreciation as workings, however you were dealing with it.
I think you are meaning to show the tax saving on the depreciation separately. You can do this except when a taxable loss appears (as it sometimes does in the AFM paper). In that case you need to know the tax loss so that it can be carried forward against future taxable profits.2. In practice it could, but in the AFM exam, that possibility is always ignored 🙂
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