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During the year some items were revalued by $90,000. No items had previously
required revaluation.196 What amount should be charged to the revaluation surplus at 31 December 20X4 in respect of deferred tax?
A $60,000
B $90,000
C $18,000
D $27,000196 D (90,000 × 30%) will go to the revaluation surplus
why charge revaluation surplus with deferred tax ? why not charge profit and loss
just a quick note for you to think about – you didn’t give me the income tax rate when you wrote out the question
I can see that it’s (apparently) 30% but it would have been good to be told this instead of having to deduce it!
“Why charge revaluation surplus with deferred tax ? why not charge profit and loss”
This tax will only become payable when the revalued asset is disposed of so it may as well sit in the revaluation account because, when that revaluation gain is realised, that’s the time the tax will be payable
Makes sense?
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