- This topic has 3 replies, 2 voices, and was last updated 4 months ago by
John Moffat.
John Moffat.-
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shaunak22
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in the textbook they have shown that we have to calculate the TAD and shown it as an addition in cash flow
DOUBT – could i subtract the depreciation then calculate the tax and then add back depreciation again or would would mark be deducted for doing so?
John Moffat
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That is the normal way of doing it in Paper FM just as I explain in my free lectures on investment appraisal with tax (and seems of course to be the way that your book is explaining).
shaunak22
- Topics: 195
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sorry sir i did not quite understand your reply which is the normal way of doing it the one explained in the textbook where you calculate the TAD and show it as a cash inflow OR When you subtract depreciation and calculate tax and then add back?
DOUBT – would marks be deducted for subracting depreciation calculating tax and then adding them back again?
John Moffat
- Topics: 57
- Replies: 49611
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We subtract the TAD to calculate the taxable profit, We then calculate the tax. Then we add back the TAD to the cash flows because it is not a cash flow.
That is what your book says and that is what I explain in the lectures.
Have you watched the lectures? 🙂
shaunak22
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