Deferred taxation question no 2

Here’s what I responded to your similar question a couple of days ago!

Open 2 T accounts, 1 for deferred tax and 1 for current tax

Put in the brought forward figures – beware that you get them on the correct side (debit or credit as per the question)

In this case, you can also put in the carry forward amounts

In the deferred tax account we are told that, of the $6,750 liability to carry forward, $3,750 relates to the revaluatin so we need to transfer that from deferred tax account to revaluation reserve

Balance off the deferred tax account and double enter the balancing figure to the current tax account

Balance off the current tax account and the missing figure is the charge for the year to be debited to the statement of profit or loss

Here’s the detail:

In the deferred tax account

Debit side:

6,750 carried forward

Credit side

2,600 brought forward
3,750 transfer to revaluation reserve
400 balancing figure double entered to current tax account

In the current tax account

Debit side

400 double entered from the deferred tax account
19,400 carried forward

Credit side

800 brought forward
19,000 charge to the statement of profit or loss

Follow these basic principles – it really is straight forward!

I really hope that you are in fact writing out these T accounts as I take you through them, step by step!