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Hi sir. my question is related to deferred tax calculated in revaluation of NCA
e.g we revalued our non current asset (NCA) from 1000$ to 2500$. (tax rate is 25%). So, we calculate deferred tax for the amount of 1500 (revaluation surplus). we write double entry like following:
DR Revaluation surplus – 375$
CR Deferred tax – 375$
my question is about calculation of deferred tax after sale of NCA. in this case which double entry we write related to tax?(suppose we receive 1000 $ gain on sale of NCA).Your figures are not sufficient enough for me to give you a calculated answer
However, when a revalued asset is sold, the tax accounting is based on the capital allowances rules (F6) and the figure in the deferred tax account that relates to that asset is no longer required
No double entry for that ‘non-requirement’ is needed. Instead, the adjustment is automatically taken care of by carrying down the reduced required liability and the balancing figure is taken to the Current Tax account
OK?
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