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Good day Sir!
the method i used for taxes and capital allowances is:
revenues
(costs)
———
Cfs Before Tax
(tax on cfbt)
tax benefit from CA (calculated separately in working)
———-
cashflowsam pretty sure the above is correct. and i think i am having issues as how to treat loss in the first year.
in the year of loss (in this case yr 1) how can we claim tax savings?
regards
Any losses are subtracted from the following years profit to reduce the taxable profit.
In this situation it is better to use the other method for dealing with tax. i.e. subtract the capital allowances to get the taxable profit (or loss) then calculate the tax, and then add back the capital allowances because they are not a cash flow.
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