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- This topic has 4 replies, 2 voices, and was last updated 11 months ago by John Moffat.
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- January 19, 2024 at 9:54 pm #698665
tax losses to carried forward and wrriten off- tax 30%, CA 25% , Initial investment -30600 , scrap 13500. tax payable in 1 years itime.
sir how to solve this question using the other method i.e tax savings (not minusing and adding back of capital depreciation method)
can u plz solve it using that method -since from fm i am using this method and to change to other method its very confusing0 1 2 3 4 5
cash flows b4 tax -7000 12500 13225 13834January 19, 2024 at 9:55 pm #698666cashflow -7000 is of year 1 ok!
January 20, 2024 at 10:54 am #698686As I do explain in my free lectures, you can’t solve it using the ‘other method’ because of the fact that losses are carried forward and reduce the taxable profit in later years (which is something that never happens in Paper FM, but often happens in Paper AFM).
January 20, 2024 at 6:43 pm #698697ok got it.
but here in tippletine co question they have not added back tax allowable depreciation.
shouldnt we be adding it back adter deducting tax?or is this the special case where we dont have to add back?January 21, 2024 at 10:27 am #698736When arriving at the cash flows in the first part of the answer, TAD has not been subtracted (the tax has been calculated separately in the workings). Given that TAD has not been subtracted in arriving at the cash flows, there is nothing to add back.
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