Yamini Swarnalatha (Chartered Accountant) (112 Points)
11 November 2011Dear all!
For Goodwill valuation, in a problem PBT and income tax rate are given. revalued amount of fixed assets and the amount of additional depreciation to be provided are also given. The addnl depn is deducted from PBT but, the same is specifically added back for computing tax amt.
Illustaration:-
PBT- 100000
less: addnl depn- 40000
balance - 60000
Less: tax @ 50%-50000
(100000*50%)
PBT- i.e. FMP - 50000
why should we add back addnl depn for computing tax?
CA. Kunal Lakhotia
(ACA)
(1006 Points)
Replied 11 November 2011
tax wil be 30000...n nt 50000...tax is levied on bal 60000 which is called FMPBT
Joyal
(Article assistant)
(30 Points)
Replied 11 November 2011
CA Sarika Tiwari
(Partner)
(32 Points)
Replied 11 November 2011
In simple language i can say for Income Tax Amount calculation actual depreciation is allowed as deduction and not additional depreciation. We are deducting additional depreciation just to calculate amount of Goodwill..
CAclubindia
