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Hello
I have encountered a problem while preparing the appropriate journal entries relating to the deferred tax as in the scenario stated below. May I get your opinion in solving this question?
Scenario (Question : What are the journal entries to account for deferred taxes) :
Company ABC has incurred loss of $ 200000 in 1 January 2010. In 2016, the company bought a motor vehicle and as at 31 December 2016, the taxable temporary difference (TTD) of RM 100000 is related to the motor vehicle. Assume tax rate is at 25%, what are the journal entries?
My Answer would be :
Dr Deferred tax asset (200000×25%) 50000
Cr Tax credit 50000Dr Deferred tax asset 50000
Cr Tax expense (SOCI) 25000
Cr Deferred tax liability 25000May I know are these journal entries correct?
Thank you
Where’s this question from? It’s not an ACCA question is it? The text from which you have drawn this example surely has a printed solution in it
1 January, 2010?
You’re only going to be able to relieve those losses if there is a reasonable prospect of reversing those differences
You’re not going to be asked to show journal entries in the F7 exam
The limit of knowledge required for F7 concerning current and deferred taxation is pretty much limited to the numerous examples that are shown in the mini exercises towards the end of the course notes
Get on top of those exercises and you’ve got 4 – 6 marks in the bag
OK?
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