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Hi Mike,
I am bit confused betwee practise question 1 & 2.
In Q1 it says, B’s TB had a Cr bal of 3210.B’s net asset have carrying value of 7000 greater than the tax base. tax rate is 30%. In this solution the amount you took as D.tax whuch was carried to C. tax acc was 3210- (2100;7000X30%)= 1110.
That means 2100 is D tax liablity right?In Q2, TB showed Cr bal of 8593700 for D tax. B estimated carrying value on net assets were to exceed tax base by 26million. tax rate 32%. Here the D tax amount which you carried to C tax account was 273700; 26mX32% rather than 8593700 – 273700 = 8320000.
why have you carried different amounts from D tax account to C tax account in the 2 sums?Thanks.
ABI have dealt with BOTH answers in EXACTLY the same way!
I cannot begin, for the life of me, to see where you think that I have been inconsistent in even the smallest degree!
In both situations I knew the brought forward, I calculated the carry forward and that left me with a transfer to Current Tax account to be done
In 1st sum the transfered amount to the C.tax account is OPENING BALANCE LESS tax% of the difference in net asset value and tax base.
where as in 2nd sum, the amount transfered to the C.tax account is JUST tax% of difference in net asset value and tax base.
are these not different?
what am I missing in here?‘In 1st sum the transfered amount to the C.tax account is OPENING BALANCE LESS tax% of the difference in net asset value and tax base.’
NO it isn’t! The amount transferred, 1,110, is the difference between the brought forward liability and the carry forward liability
In BOTH answers, in the Deferred Tax account, we have a brought down figure from the previous year (both of them are a credit balance brought forward) and we have a carried forward figure into next year (again, both of them are a debit entry above the line and a credit entry below the line)
In BOTH accounts we than have a missing, balancing amount (1,110 in example 1 and 273,700 in example 2)
These figures are double entered to the respective Current Tax accounts (debit deferred tax and credit current tax)
There is ABSOLUTELY NO DIFFERENCE in the way these answers have been dealt with
Ok, I absolutely agree with you.
The opening liability for both of them is 3210 and 8593700, both Credit balances. Now, can you please tell me how did yu arrive at the carry forward liability for both of them?
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