In the bpp kit, it seems that the closing deferred tax balance has been added to the opening balance to arrive at the closing balance. This has been done where there is a revaluation surplus. Is this correct. why is this so
What I think is that the amount that comes after multiplying the taxable temporary differences by the income tax rate is the closing balance which does not require adjustment
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3y ago#1Sorry, I don't follow. What question are you looking at?
During the year, the company's taxable temporary differences increased by $10 million of which $6 million related to the revaluation of the property. The deferred tax relating to the remainder of the increase in the temporary differences should be taken to profit or loss. The applicable income tax rate is 20%. The opening deferred tax is given as 19200. What I think is that the closing deferred tax balance is 2000 which does not require adjustment. but why is this incorrect. why is 2000 not the closing deferred tax. Also if revaluation surplus is removed from 2000 then the amount for statement of profit or loss is 800. This 800 will then be compared to 19200 to give the statement of profit or loss amount which is a credit of 18400 but why is this incorrect
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