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Why in this question tax saving @ year end due to loss on sale of asset is not considered ? ... I have also shared my working pls where iam wrong
Answers (7)
Sriram Somayajula Admin
The way you write 4 is very similar to number 9 - please be careful else you could lose marks Secondly on tax adjustment - icai missed it
I don't think ICAI has missed it sir because sir said tax gain/savings will be calculated only when Both market value and book value is given . Let's assume salvage value given in the Q is market value then how you'll come to book value at the end of 8th year ? Because from salvage value itself we had calculated depreciation so ultimately there will be no gain or loss. And also it is "Expected salvage value" where it is mentioned that it will surely be sold at the end of 8th year for this value only.
Himanshu Somani
I don't think ICAI has missed it sir because sir said tax gain/savings will be calculated only when Both market value and book value is given . Let's assume salvage value given in the Q is market value then how you'll come to book value at the end of 8th year ? Because from salvage value itself we had calculated depreciation so ultimately there will be no gain or loss. And also it is "Expected salvage value" where it is mentioned that it will surely be sold at the end of 8th year for this value only.
Let me go through the full question again- because they did miss this in a few problems and we had to add a note saying that tax effect should also be considered
Sriram Somayajula Admin
Let me go through the full question again- because they did miss this in a few problems and we had to add a note saying that tax effect should also be considered
Agree - went through the full question; in this Q - Book value will be computed after deducting accumulated dep - this comes to 18K at end of year 8- salvage value expected to be realized is also 18K - so no gain or loss - I had seen your working and assumed that BK value is given @ 22750 - my bad - in this question no tax impact for salvage cost
Sriram Somayajula Admin
Agree - went through the full question; in this Q - Book value will be computed after deducting accumulated dep - this comes to 18K at end of year 8- salvage value expected to be realized is also 18K - so no gain or loss - I had seen your working and assumed that BK value is given @ 22750 - my bad - in this question no tax impact for salvage cost
Is this is the assumption we need to take for all sums ?
Thread Starter
Sri kanaga VarshiniIs this is the assumption we need to take for all sums ?
you have to consider tax benefits & tax impact on all items when the tax rate is given unless questions say otherwise
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