Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Deferred tx liablity – Eg 2
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- August 12, 2016 at 7:01 pm #332891aamir2111Member
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In e.g. 2 of JURGITA in lecture notes,
your working for deferred tax is as follows:
Book value : 400K in 2004, 200K in 2005 and 0 in 2006.
Written down tax value: 0 for all 3 years.
My question is, what is written down tax value? And how did you arrive at figure of 0 for all 3 years?
AB.August 12, 2016 at 9:04 pm #332895MikeLittleKeymaster
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Remind me please – it will save me downloading the course notes – doesn’t the question say that tax allowances are 100% in the first year?
If the question doesn’t say that, post again and I’ll look it up
But if it DOES say that, effectively that’s the “tax depreciation” rate that the taxman will allow on that plant so, after the first year and 100% tax allowance has been claimed, there’s no more tax allowances available on that asset …
… and that’s why the tax written down value is zero
If the capital allowances had been, say, 20% then the tax written down value at the end of year 1 would have been 80, then 64, then 51.2, then 40.96, and so on
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