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Jasper Orange Co’s trial balance at 31 December 20X3 shows a debit balance of $700,000 on current tax
and a credit balance of $8,400,000 on deferred tax. The directors have estimated the provision for income
tax for the year at $4.5 million and the required deferred tax provision is $5.6 million, $1.2 million of which
relates to a property revaluation.
Why do we remove the 1.2 million from the total tax liability for the year?
The deferred tax on the 1.2 million goes through OCI and not through profit or loss, hence why it is removed.