Sir, I know our exam is finished. But i wanted to know why don't we take time value of money into account while depreciating? If we took time value of money into account then we could show more money as depreciated and cut down our tax-able income in other words our tax lower. Is it because depreciation is a non-cash expense?
Dear Ashfaqur:
You have rightly pointed that out! Depreciation is a non-cash expense. It's a process of cost allocation, not a valuation. Depreciation is determined based on the historical cost of a depreciable asset. It does not change, unless you revalue. Another thing is that when we apply time value of money concept/model, we apply that on the cash flows. When we determine cash flows we do add all types of non-cash expenses including depreciation. In other words, depreciation is considered for time value of money indirectly.
Hope this has been helpful.
3 comments:
Sir,
I want to apply for the part time job. My contact details are given below:
Nabila Tasmim
Act: 201
I.D. no: 081-328-030
Emai id: tasmimnabila@yahoo.com
Sir,
I want to apply for the part time job. My contact details are given below:
Nabila Tasmim
Act: 201
I.D. no: 081-328-030
Emai id: tasmimnabila@yahoo.com
Sir what is 'Porishodhito' capital in share market. Suppose a new brokerage house has to pay 7.5 mil tk for its 1st 3 branches and 5 mil for each of the next ones as 'porishodhito' capital.what does it mean?
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