Preference Capital
Hello.. I would like to know why we do not deduct preference capital when calculating capital employed in the valuation of goodwill. Pref capital is similar to debentures. The shareholders cannot get any return other than the agreed interest rate. The funds from the pref capital subscripttion are also used in the business so why is not deducted? .
Provision for tax
There seems to be a difference in the calculation of tax provision when calculating for FMP and capital employed. I would like to know why the manner of calculating tax differs. I have currently understood that the tax provision in capital employed refers to the past period whereas in FMP it is for the future period.
Income from Non operating assets - tax effect - Capital Employed
I have currently understood that the reason income from non-operating assets are taxed when preparing capital employed is because the income is received in cash and used in the business. Hence, included in cash/operating assets as the case may be.
Assuming Income from non-operating assets is reinvested. In the following cases Would the tax provision on the non-operating income be excluded when calculating capital employed.
a. Non operating income expended for non-operating expenses
b. Non operating income used for Non operating assets
Thank you very much for your time
CAclubindia
