Help needed on deferred tax movement calculation

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This topic contains 2 replies, has 2 voices, and was last updated by Avatar of karmuks karmuks 1 year, 7 months ago. This post has been viewed 452 times

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  • Avatar of karmuks
    karmuks
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    HI, i cannot find how 0.6m deferred tax movement was calculated.

    http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/p2int_2009_jun_q.pdf

    http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/p2int_2009_jun_a.pdf

    Its a first question, retained earning working. Calculation of post acquisition profits of Mixted. Please help me on this.


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    christine
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    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..


    Avatar of karmuks
    karmuks
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    • Topics: 16
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    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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