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Hi i want to know why the question used tax rate enacted for 20×7 for the calculation of deferred tax?
Given in the question to tax rates. One being current income tax rate of 30% and the other is tax rate enacted for 20×7
Is there any rules regarding the chosen tax rate. Because the question want to draft SOFP at 30/9/20X6.
Hi,
You just need to be careful with regards the tax rate. The specific rules are that we use the tax rate at which the deferred tax will be settled at in future, providing that the tax rules have been enacted. So here given that the 28% has been enacted at the reporting date and this is what the tax will be settled at, then we use the 28% at the reporting date.
I don’t recall seeing this too many times in the F7 exam, so don’t worry too much about it and just have an awareness of the quirky rule.
Thanks
Hi,
It’s easy to say, but try not to get too stressed out by the small minor details. Focus on the basics.
It sounds like you’ve got a very good understanding of deferred tax and will easily be able to apply it in the exam.
Thanks
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