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We know, formula of reducing balance method of depreciation is;
(cost-salvage value)*depreciation ratebut in the calculation of Tax allowable depreciation why is the cost of asset directly multiplied by depreciation rate without reducing salvage value????
Exactly which paper are you studying for?
Although I will answer you, TAD is not examinable in Paper MA (it is not examined until Paper FM).
Even in financial accounting, any salvage value is not normally taken into account when using reducing balance depreciation (only if using straight line depreciation).
For tax allowable depreciation it is never ever taken into account. This is a tax rule. The disposal value is not relevant until the year of disposal when it results in a balancing charge or balancing allowance. This is all explain, with examples, in my free Paper FM lectures on investment appraisal with tax.
thanks. Actually I am studying MBA in Accounting and Information Systems at a public university in Bangladesh. and one of my course is “strategic financial management”
where i am studying the text book – ACCA P4 – Advanced Financial Managementthanks. Actually I am studying MBA in Accounting and Information Systems at a public university in Bangladesh. and one of my course is “strategic financial management”
where i am studying the text book – ACCA P4 – Advanced Financial Management
Thats why i am facing some problems relating these issues 🙁 🙁
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