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Thanks Mike for your previous feedback. I´ll make sure I revise F3 after the F7 exam.. I think I know the c/d and b/f layout on the T account OK enough but could do with some revision…!
For the question below… Answer: we add 255 (NCA) + 15 (dep) + 75 (revaluation), and get the answer D $345,000.
But why are we adding the deprecation +15 and not substracting it? My reasoning was… because the entity claimed for more Depreciation on the Tax Comp than on the financial statements, the difference of $50,000 x .3 would go on the CR side of the DT account and not the DR side?
191 The following information relates to an entity.
(i) At 1 January 20X8 the carrying amount of non-current assets exceeded their tax written down value by $850,000.
(ii) For the year to 31 December 20X8 the entity claimed depreciation for tax purposes of $500,000 and charged depreciation of $450,000 in the financial statements.
(iii) During the year ended 31 December 20X8 the entity revalued a property. The revaluation surplus was $250,000. There are no current plans to sell the property.
(iv) The tax rate was 30% throughout the year.
What is the provision for deferred tax required by IAS 12 Income Taxes at 31 December 20X8?
A $240,000
B $270,000
C $315,000
D $345,000 —> CorrectBecause we’ve claimed tax allowances of $50,000 more than the depreciation that we’ve put through the accounts
So that means that, at some time in the future, we’re going to be claiming that $50,000 and taxman’s going to say “Whoa, mister. You can’t claim that – we’ve already let you have tax allowances on that $50,000”
Think simply
The point (i) tells us “At 1 January 20X8 the carrying amount of non-current assets exceeded their tax written down value by $850,000” and, after claiming that extra $50,000, that excess rises to $900,000
Is that better?
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