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Dear all
i do not understand the following please help
“A company purchased an asset costing 300,000 on June 30, 2005. The residual value of the asset is 20000 and useful life is 10 years. The company follows the straight line depreciation method for charging depreciation from the date of purchase (proportionate depreciation policy). While under tax laws a 50% tax allowance is available in the year of purchase and 25% on reducing balance basis thereafter. The tax rate is 30%.
Required: a) Calculate the deferred tax (asset/liability at December 31, 2007.
b) Prepare ledger account of deferred tax for all the relevant years.Before I post a response, have you tried working through the printed solution?
dear Mike
i have solved the question. i m concerned about intial recognition issue…apart from that…if u dont recognise the any deferred tax on initial recognition and ias said that deferred tax can not be recognised on such item subsequently…i want to ask then which are the items (assets / liabilities) on which deferred tax should be recognised coz nothing remains if we apply this rule…please help me to resolve my confusion…kind regards
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