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Hi John,
On example 3 lesson 9, I dont fulyl understand why in the lease scheme we have the 10,500 as tax saving. Thanx for the clarification!
Have you watched the lecture, where I work through this example and explain it?
We always assume that the lease payments are tax allowable (and that the company is already making profits and paying taxes).
So extra lease payments mean less taxable profits and therefore less tax payable i.e. a tax saving.(It is in the lectures that I explain and expand on the notes. If you are not watching the lectures for any reason then you need to study using a Study Text from one of the ACCA approved publishers – the notes on their own are not enough.)
I mean I understand how we get it but not why we deduct it from the 35k to get the net cash flow. Why is it a tax saving? Isnt it the amount we will pay for taxes at the end of each year?
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