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Hi sir
plz tell me how TDa is calculated?
when we calculate TDA we calculate tax allowable dep. and then calculate tax saving on it???
There is different???
To deal with tax you can do either of two things:
Calculate the tax on the net operating cash flows (ignoring depreciation).
The bring in the tax saving as a result of the depreciation.
(which is the way you have written).The alternative is to subtract depreciation for the cash flows to calculate the taxable profit
Calculate tax on the taxable profit
Then add back the depreciation (because it is not a cash flow).Both approaches will give the same final cash flows.
(Please change your logo – it is an ACCA trademark and they get very upset when anyone else uses it! 🙂 )
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