Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Talam co Q1 march / june 2019
- This topic has 6 replies, 3 voices, and was last updated 4 years ago by John Moffat.
- AuthorPosts
- October 26, 2019 at 10:23 pm #550916
Sir in the question it is given that company has made sufficient profits to get advantage of any tax loss relief
Please explain this statement as cash flows in year 1 are (3732) so the company should get tax loss relief by deducting this amount from year 2 and then applying the tax rate but in the answer no tax loss relief is given and instead there seems to be tax benefit of 1796 how come all this is happening no idea?
October 27, 2019 at 8:38 am #550948This is the normal assumption that we make (unless told otherwise or the investment is in another country), just as we always did in Paper FM (was F9).
We assume that the company is already making profits elsewhere and is therefore already paying tax. If the new project makes a ‘loss’ it simply means that the company as a whole is making less profit than before and will therefore pay less tax than before – the new project is therefore resulting in a saving of tax (effectively a tax inflow).
October 28, 2019 at 8:39 pm #551102So when do we do the offsetting of losses against taxable profits ?
October 29, 2019 at 5:47 am #551113As I wrote in my previous reply, we only carry forward losses if it is a new investment in a foreign country (because then there are no existing profits to set the loss off against).
November 25, 2019 at 8:29 pm #553749Sir,in the same question how do they get Pa=16959?
ThanksNovember 25, 2019 at 8:32 pm #553750got it , sorry
November 26, 2019 at 8:36 am #553783Great, and no problem 🙂
- AuthorPosts
- The topic ‘Talam co Q1 march / june 2019’ is closed to new replies.