Good afternoon Mike,
I have a couple of questions of Chapter 18. The first one is related with example 2, I don't understand why the figures of 100k, 50k and 50k deferred are first added and discounted respectively in years 2009,2010 and 2011. I understand the working 2 but I don't completely get the interaction with the rest of the figures.
The second question is regarding Example 4, why in 2010 the current tax is 125k?
Thank you very much for the clarification
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Deferred Tax
11y ago#1I'll do the calculations with tax allowance taken in full to begin with and then calculate the accounting profits next
Profits per question 1,800, 2,300, 2,500
Capital allowances 600
Taxable 1,200, 2,300, 2,500
Tax at 25% 300, 575, 625
Now the accounting way
Profits per question less 200 each year for depreciation
1,600, 2,100, 2,300
Tax at 25% 400, 525, 575
Can you see now how the tax varies when 100% capital allowances are claimed? 100 under paid in year one, then 50 overpaid in year 2 and again in year 3 and that's where those numbers come from!
Ok?
Yes ! Many thanks for the clarification.
11y ago#3You're welcome
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