Hi Mike,
I do not understand the concept of deferred tax in this question with Andris.
I understand the calculation for current tax.
As well as the working for the Net book value less depreciation which is
$400 - $200 and Nil for the 3 years.
After finding the 25% deferred tax which would be $100 - $50 and Nil
Why is there a deferred tax of $50 in the final year for an asset with no value, and not just for the 2 yrs? The current tax is already accounted for that final year, and this asset is worth nothing. I do not understand the logic? Please explain.