Dear 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?
CAclubindia
