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For this qn 1 bi I didn’t understand y for year it’s 12250 for tax allowable depreciation…plz explain on that..
What n how did they get that…
Why did they did that…….
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And for y1 y did they charge tax on lossI have answered your first question in reply to your other post of it.
In year 1 they have not charged tax on loss. We always assume that the company is already making profits and is therefore currently paying tax. Therefore a ‘loss’ on the new investment reduces their existing taxable profit and therefore saves tax.
The 1,796 is a tax saving and therefore appears as a tax saving in arriving at the net cash flow.
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