Ⅰ - problems related to measuring cash flows:
Indicates cash flows within and outside of each investment project, a range of difficulties are as follows:
Ⅰ -1 - amortization expense of accounting and cash outflow (costs):
Of the conventional accounting, that when you buy money account an asset for an institution of fixed assets, we record such as the flow out of the purchase price (cost), in addition to the distribution of the burden of this flow on the bonds the economic life of the parent (which is known Alight accounting), but that the latter and that was recorded in the books as a charge against income, does not represent any actual cash flow outside of the institution is just under accounting.
And therefore may not be included in the cost of the project each of the initial spending (which happened when you purchase the asset) and the annual amortization of this amount, because it means the inclusion of cost of the asset in the cost of the project twice. Since the analysis seeks to take into account the time value of money, the appropriate number, which takes into account, cash flow is actually occurred at the time of expenditure, and does not take amortization accounting only with respect to income tax.
Ⅰ -2 - the impact of income tax cash flows:
Is to calculate the net annual cash flow of any project as follows:
Net cash flow = cash flow home (revenue) - cash outflow (costs)
Note that the costs do not include only the costs of operating cash for the project (raw materials and wages, and ...), but also the tax on commercial and money account industrial profits to be paid by the organization. The good net profit is calculated on the accounting concept, which calculates the relationship:
Net accounting profit = annual revenue - operating costs in cash - amortization
Tax laws do not allow the deduction of all costs for fixed assets from the income year in which the purchase of fixed asset, and it allows the distribution cost of the asset-year-old economist, and deducted from the annual amortization of premium income to reach the accounting profit subject to tax which is calculated for, and thus reduce the amount of tax paid by the organization.
Ⅰ -3 - realizable value of the waste:
In most cases, the assets have a component of the account services project the value of selling at the end of the economic life of the project, and to determine their impact on the realizable value of cash flows for the investment project submitted to the study, it must distinguish between the following cases:
A - at the end of the economic life of the project, is realizable value cash flow inside the institution, and therefore added to the estimated income of the activity in the last year of his age, and when calculating the income tax for this project, taking into account not to enter the estimated realizable value as income last year of the project, will not tax the profits of Commerce and Industry is a tax on income, and not a tax on capital (and realizable value of the waste is to import part of the capital invested in assets).
B - in some cases may have on establishing a new project to do without some of the assets existing in the organization especially in the case of replacement and renovation projects, and thus the net realizable value (the value realizable from the sale of old assets, minus any expenses related to remove) affect the cash flows for the investment project as follows:
• Net realizable value of the assets of the old developments lead to lower initial amount of hypocrisy (investment costs) necessary to establish a new project, which put the realizable value of expenditure to reach the outflow from the enterprise or the establishment of the new project.
• If resulting from the sale of old assets of any profits due to increased net income from the sale of these assets (after deducting the total expenses) for the monetary cost, these profits are subject to profits tax on commercial, industrial, and thus lead to increased spending by the initial tax on capital gains But if the sale of assets resulted in the loss of this loss gives the tax advantage of the institution (units must be deducted from the initial expenditure for the new project).
