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I am unable to understand the timing part of when to recognize the tax benefits.
the kaplan text says:
if bought on first day of accounting year, the benefit is in T2
if bought on the last day of accounting year, the benefit starts from t0.do you have a lecture where this is covered? or can you explain it please
thank you!
If you have copied Kaplan correctly then it is wrong!
If tax is payable with a one year delay (which is the most likely in the exam) then:
if the machine is purchased on the first day of an accounting period, the tax saving on capital allowances (tax allowable depreciation) will be at time 2. If the machine is purchases on the last day of an accounting period, then the first tax saving will be at time 1.If tax is payable immediately then:
if the machine is purchased on the first day of an accounting period, the tax saving on capital allowances (tax allowable depreciation) will be at time 1. If the machine is purchases on the last day of an accounting period, then the first tax saving will be at time 0.In exam questions the machine is always assumed to have been purchases on the first day of an accounting period, except in lease buy questions where it may be the last day of an accounting period.
The rules are all explained in our lectures (on investment appraisal with tax) and repeated in the lectures on lease and buy.
However it is not sensible to pick lectures at random. They are a complete course for Paper F9 and cover everything needed to be able to pass the exam well. If you download our free Study Guide and follow the programme attached then you do not need a Study Text. It is worth using a Revision / Exam Kit, because the more questions you practice the better (although we have online MCQ practice tests on every topic; an online MCQ mock exam under time pressure (which is different each time you attempt it); and our Study Guide lists the best past exam questions to use for practice (and the questions can be downloaded from the ACCA website).
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