- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
Dear Mr. Mike
Thanks in advance for your help
An Enterprise is preparing its accounts for the year ended 31 Dec 20X1.
The carrying amount for its tangible non current assets was $2,000 at 31 dec 20X0 and $1,800 at Dec 20X1. The equivalent tax bases for these assets was $1,600 at 31 Dec 20×0 and $1,200 at 31 Dec 20X1.
The rate of tax is 30%What’s the deferred tax charge or credit included in profit or loss for the year ended 31 Dec 20X1?
Charge of $60
Credit of $60
Charge of $120
Credit of $120Dear Mr. Mike
I hope your reply is not means you angry from my questions,
My answer is Charge $120 ( Please note if i’m totally sure about my answer I will not post the question here, anyway thank you)
My Question is
What’s the deferred tax charge or credit included in profit or loss for the year ended 31 Dec 20X1?I believe that it’s a charge of $60
In the deferred tax account you have on the credit side:
credit balance b/forward of 30% x ($2,000 – $1,600) = $120 and on the debit side you have:
debit balance to carry forward of 30% x ($1,800 – $1,200) = $180
So there is a missing figure in the deferred tax account of $60 on the credit side
To double enter that $60 we should debit the profit or loss account and credit the deferred tax account
OK?
And, no, I’m not angry with you but you should tell me what your guess was so that I can try to see where you’re going wrong
- You must be logged in to reply to this topic.