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Deferred Tax question BPP

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Deferred Tax question BPP

  • This topic has 2 replies, 3 voices, and was last updated 7 years ago by FENGJIAO.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • October 25, 2015 at 7:53 am #278810
    oana
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    In the BPP Revision Kit there is the following question: “A company’s trial balance at 31Dec shows a debit balance of 700000$ on current tax and a credit balance of 8400000$ 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 mil, 1,2 million of which relates to to a property revaluation . What is the P&L income tax charge for the year? ”

    Can you please help me in understanding how the movement in deferred tax, including the revaluation of property, impacts the tax charge for the current year?

    November 3, 2015 at 9:57 pm #280396
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    Watch me do it on the screen. The tax element of the old question 2 (before the new exam structure came in) were probably the two easiest marks to pick up. The topic is a walk in the park, can be done in less than 1 minute and is worth at least 2 marks and often 4 marks in the old questions 2

    November 4, 2015 at 5:45 pm #280512
    FENGJIAO
    Member
    • Topics: 0
    • Replies: 4
    • ☆

    1. Deferred tax liability
    $’000
    b/f 8,400
    Deferred tax liability–balance figure (4,000)
    DTL-revaluation surplus 1,200
    c/f 5,600

    2. Income tax
    $’000
    Under-provision last year 700
    Tax payable–F/P 4,500
    DTL-balance figure (4,000)
    Income tax expense 1,200

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