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Hope you are doing well,
I just need to know is it a good question to solve?
It is OK, but it is not really representative of the current exam (and it was not written by the current examiner).
Hope all is well with you….
The question says, ‘Assume all tax payments and allowances arise at the end of the year in which the taxable transactions arise ( in other words not delayed). Assume that all operating cash inflows arise at the relevant year-end.’
Just a query, I’d be taking tax benefit in the year 0 and so on? Am I right?
Thanks in advance.
Yes, you would be right.
The reason is that the machine is purchased at the end of an accounting year (31 December) and therefore the first capital allowance computation occurs immediately, and then tax is payable immediately.
So the initial cost and the first cap all saving are both at time 0.
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where can I find a copy of this question paper it is not on the site
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