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TAX
GROUP MEMBERS
IQRA HAMID (PP-15007)
MAHA ALTAF (PP-15011)
MARYAM MAJID (PP-15013) DEPRECIATION
MADIHA REHMAN (PP-15016)
TAX
Taxes are a defined as mandatory payments of the contributors to the budget
determined by law or within some deadlines.
DIRECT TAXES:
A tax that is paid directly by an individual or organization to the imposing entity.
INDIRECT TAXES:
An indirect tax is a tax collected by an intermediary from the person who bears the
ultimate economic burden of the tax.
Customer Government
Client
DIRECT & INDIRECT TAXES
DIRECT INDIRECT
TAX TAX
EXCISE
INCOME CORPORATION WEALTH CUSTOM SALES DUTY
TAXES MATTER
• Taxes affect citizens
• Economy of the country
• Businesses, governance mechanisms etc.
• Not only revenue mobilization
• An effective system of taxation helps in formalization the economy
• Encourages economic growth
• Shapes political cohesion between tiers of the Government and results in increase in social
sector service delivery.
OBJECTIVES OF TAX
• Raising revenue
• Stimulating investment
LEIGISLATURE
FBR Revenue
Subsidies
CAUSES
DOUBLE
STRAIGHT LINE DECLINING
BALANCE
UNITS OF SUM-OF-THE-
PRODUCTION YEARS-DIGITS
TYPES OF DEPRECIATION
STRAIGHT LINE:
Depreciation Expense = (Cost – Salvage value) / Useful life
TYPES OF DEPRECIATION
DOUBLE DECLINING BALANCE:
Periodic Depreciation Expense = Beginning book value x Rate of depreciation
TYPES OF DEPRECIATION
UNITS OF PRODUCTION:
Depreciation Expense = (Number of units produced / Life in number of units) x (Cost –
Salvage value)
TYPES OF DEPRECIATION
SUM-OF-THE-YEARS-DIGITS:
Depreciation Expense = (Remaining life / Sum of the years digits) x (Cost – Salvage value)
ASSETS ELIGIBLE FOR DEPRECIATION
Tangible
Immovable
Property Movable
Property
Depreciable Furniture
Building
Asset
Structural
Machinery improvement
TERMONOLIGIES USED IN DEPRECIATION
USEFUL LIFE:
• The estimated lifespan of a depreciable fixed asset during which it can be expected to contribute to company
operations.
• Number of production expected to be obtained from use of assets.
Residual value:
The value expected to remain when the asset is retired
at the end of useful life.
BOOK VALUE:
Also called net book value. This refers to the balance sheet amount at a point in time that reveals the cost minus
the amount of accumulated depreciation (book value has other meanings when used in other contexts, so this
definition is limited to its use in the context of PP&E).
FIXED ASSETS
• Fixed assets are a company's tangible, noncurrent assets that are used in its
business operations.
• An inventory item cannot be considered a fixed asset
• Enable their owner to carry on its operations
DEPRECIABLE COST
• The amount of cost that can be depreciated on an asset over time
• Not solely based on the purchase price of an asset.
• It is the cost minus the expected salvage value.
DEPRECIABLE COST
• The amount of cost that can be depreciated on an asset over time
• Not solely based on the purchase price of an asset.
• It is the cost minus the expected salvage value.
CONCLUSION
• So, all over we see that Taxes & Depreciation are necessary part of any account &
economy system.
• Both are an expense used to calculate profit, try to increase economy and reduces
the value of assets.