Tax allowable depreciation

This topic has 6 replies, 2 voices, and was last updated 6 days ago by John Moffat.

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February 11, 2025 at 10:32 am #715330
sahil2024
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I have doubts regarding how TAD is dealt with in Investment appraisal. With written down balance method, in the final year we subtract the residual value with the sale proceeds to get the balancing allowance or charge and if we aren’t given resale proceed we just bring the balancing allowance to 0. How do we deal with sale proceeds in straight line basis?
February 12, 2025 at 6:49 pm #715355
John Moffat
Keymaster
- Topics: 57
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The rule is exactly the same, which the method of depreciation.
February 13, 2025 at 5:02 am #715368
sahil2024
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February 13, 2025 at 5:06 am #715369
sahil2024
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Do we add sales proceeds amt with the depreciation amt before deducting for balancing allowance or charge?
February 13, 2025 at 7:04 pm #715388
John Moffat
Keymaster
- Topics: 57
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The difference between the sales proceeds and the carrying value (the depreciated value) gives rise to a balancing charge or a balancing allowance.
February 15, 2025 at 5:30 am #715411
sahil2024
Participant
- Topics: 3
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Thank you for the clarification!
February 15, 2025 at 6:47 pm #715425
John Moffat
Keymaster
- Topics: 57
- Replies: 54570
You are welcome (although if you have any more problems with TAD it will help you to watch my free lectures on investment appraisal, and the Paper FM free lectures on investment appraisal with tax (because the ‘rules’ in AFM are the same as they were in Paper FM). 🙂
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