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I would like to ask if Capital Allowances is the same with Fixed Asset Depreciation we take to calculate the carrying value of that fixed asset???
Thank you!!!
Capital allowances are the amount of depreciation that are allowed for the calculation of tax. The way the company charges depreciation in their accounts is the choice of the company, but for tax purposes the profit is recalculated using the tax rules for the calculation of depreciation.
These rules are all explained in my free lectures on investment appraisal with tax. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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