there is an analytical adjustment of adding excess paid by employer over pension cost to operating activities and subtracting from financing activities. my question is why do we take after tax values of these amounts?? whats the tax benefit or expenditure on cash flows
I wish they had given us more problems/examples related to adjustments.
Borrowing funds from the pension account is like getting a loan on interest. Interest is tax-deductible, so the adjustment is after-tax. You get a tax shield on any interest-bearing loan, so the idea is similar here.
yes but we dont know the interest rate right? interest rate is adjusted for tax… here they are adjusting the borrowed amount for tax… doesn’t make sense to me…
yes but we dont know the interest rate right? interest rate is adjusted for tax… here they are adjusting the borrowed amount for tax… doesn’t make sense to me…