HI, i cannot find how 0.6m deferred tax movement was calculated.
Its a first question, retained earning working. Calculation of post acquisition profits of Mixted. Please help me on this.
In this Q, the FV of net asset of Mixted includes $8m of increase in value of PPE, and $6m more in 1Dec.. so total is $14m surplus in FV of PPE.
depreciation charge is SL method with 7 years useful life, means that additional dep charge for PPE is $14m/7yrs = $2m..
the deferred tax liability arises ($176m-$166m)x30% = $3m (This transaction adjusted at pre-acq RE)
but depreciation charge will decrease the deffered tax liability by $2m x 30% = 0.6m
so the post RE of mixted will be added back 0.6m..
Right, never would sort out this one. Now i get it. Something new for me. I was confused with that 30%. Did not know if its tax rate or NCI rate. Silly me . Thank you very much yuin87 for explaining.
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