OTCPK:MGMXD - Post by User
Comment by
materialsgirlon Jun 26, 2015 8:17am
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Post# 23871378
RE:RE:Equity bold
RE:RE:Equity bold Tayjon80
Your understanding of how the Accounting system works is quite correct. Typically, interest on loans required for construction are also capitalized and profits from the early stages of ramp up production are often treated as a reduction in capital costs rather than treated as revenue. This latter point is a quirky one and it is insignificant normally and I do not know if AXY does this.
A company such as AXY can legally and morally delay paying any tax in Canada for decades if they keep expanding operations which will create new Capital Cost Allowances (CCA). But the delay is not for eternity. A day of reckoning eventually comes so long as the company continues to make a profit.
THE CRA (Canada Revenue Agency) has a table that provides the amounr of depreciation or amortization that you are allowed each year. It might be 30% for automobiles, 5% for railway tracks and 2.5% for an apartment building. I just made the numbers up for illustration. These capital cost allowances become the basis for annual personal or corporate tax
mat