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deferred tax

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › deferred tax

  • This topic has 2 replies, 2 voices, and was last updated 11 months ago by sooha.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • February 28, 2022 at 10:45 am #649502
    sooha
    Participant
    • Topics: 31
    • Replies: 30
    • ☆☆

    kindly help !
    HIGHWOOD
    The following trial balance relates to Highwood at 31 March 20X1:
    Current tax (note (iii)) Cr 800
    Deferred tax (note (iii)) Cr 2,600

    Current tax represents the under/over provision of the tax liability for the year ended
    31 March 20X0. The required provision for income tax for the year ended 31 March
    20X1 is $19.4 million. The difference between the carrying amounts of the assets of
    Highwood (including the property revaluation in note (ii) above) and their (lower) tax
    base at 31 March 20X1 is $27 million. Highwood’s rate of income tax is 25%.

    revaluation goes like that
    land 5000 & property 10000

    * my question is when i want to calculate the tax that i should deduct from revaluation surpluses and the tax charge to SPL why should i include the land since there is no depreciation on it and the deferred tax come from the deference between the depreciation and capital allowance

    why is goes like this by including the land ??
    – as the revaluation surplus is 11250
    – tax charge to SPL is 400

    March 3, 2022 at 7:18 pm #649757
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6450
    • ☆☆☆☆☆

    Hi,

    The deferred tax does not come from the difference between the depreciation and the capital allowances. This is thinking under the old standard’s rules. We now look at the carrying value of the asset and compare this to the carrying value to get the temporary difference, hence why the land value will have been included.

    Thanks

    March 5, 2022 at 8:23 pm #649941
    sooha
    Participant
    • Topics: 31
    • Replies: 30
    • ☆☆

    many thanks ^^

  • Author
    Posts
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