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Question 4 (b) SBR Dec 2018

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Question 4 (b) SBR Dec 2018

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by Stephen Widberg.
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  • July 5, 2020 at 5:30 pm #576066
    tekachi
    Member
    • Topics: 7
    • Replies: 4
    • ☆

    Dear sir,

    As the answer, the deferred tax asset was calculated by $3m x 25% = $0.75m while the deductable temporary difference was $4.5m. Could you me explain me?

    Thank sir,

    July 6, 2020 at 12:17 pm #576117
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    My answer would be

    All of the tax is payable to the same authority

    Therefore we could offset deferred tax asset and liability

    The net taxable temporary difference is 0.5m, so the deferred tax would be 25% of this

    It would be a liability

    The examiner is arguing that they may not be able to offset deferred tax asset and liability

    In that case you can only recognise the deferred tax assets in respect of the losses to the extent that you can be confident that profits will arise in the future

    So he is arguing that he can only recognise the deferred tax asset in respect of the profits expected in the next year

    As always in the subject there is no absolutely right answer

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