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Hi Mike,
Can you explain treatment deferred tax on revalued assets using an example. It will be a help in last time of revision.
Thank You in advance.
There are two ways in which the examiner tests this
The first is rather more common than the second
1) The examiner will say something like ‘the deferred tax on the revaluation should go through the profit or loss account’
Carry forward in the deferred tax account the deferred tax on the revaluation from debit above the line to credit below the line
Balance off the deferred tax account ‘as normal’
2) Occasionally the examiner will say that the deferred tax on the revaluation should go to the deferred tax account
Carry forward in the deferred tax account the deferred tax on the revaluation from debit above the line to credit below the line
But this time, take the appropriate amount of deferred tax from the deferred tax account to the revaluation reserve
Dr Revaluation Reserve
Cr Deferred taxwith the calculated deferred tax on the amount of the revaluation
Have you bothered looking at all at the mini exercises towards the end of the free course notes?
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