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Sir i have a couple of small doubts in this qn after watching the debrief video.
1. As they have not incorporated TAD here because it is assumed to be equal to the investment for maintaining the assets.
2. Can we assume a tax benefit on issue cost of subsidy loan as the qn do not mention it.
3. Can we find the tax shield and post tax int saved on aubsidy loan on the grossed up value.
I am a bit puzzled because I cannot find a question called Fluftig in the ACCA June 2024 mock (or are you referring to a mock exam from somewhere else?).
The question is indeed from the pre June mock 2024 and the debrief has been uploaded in the ACCA Student Study Resources youtube channel. It is the first 25 mark question.
This is very odd because I can see the debrief on the YouTube channel, but the mock exam that I am able to access on the ACCA website seems to be a completely different exam (I am not able to access the normal practice platform).
I an trying to find out what is happening and will get back to you when I have found out 🙂
However, without having seen the question yet:
1. The current examiner always assume that the TAD is equal to the amount for maintaining the assets (as I explain in my free lectures) which is why he will have ignored it.
2. There is a tax benefit on all loans, whether subsidised or not.
3. This I cannot answer until I have seen the actual question.
I have now found the question 🙂
My answers to your first two questions remain the same.
As far as your third question is concerned, the answer is no because the question specifically states the amount borrowed on the subsidised loan.
So if the qn only states that – Eg: you need 50m for a project and you can get a loan, we should take the grossed up value. And if the qn states the amount of loan taken then we do not have to take the grossed up value.
thank you so much ?
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