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Question on Deferred Tax on Lease Liability

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Question on Deferred Tax on Lease Liability

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by Stephen Widberg.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 6, 2020 at 11:28 am #572974
    mayurdhruv
    Participant
    • Topics: 1
    • Replies: 4
    • ☆

    Sir, we account for deferred tax on right to use because finance lease do not have tax WDV. Why don’t we account for deferred tax on lease liability? Lease liability reduces year-on-year and ultimately neutralize over the period of lease. lease liability doesn’t give raise to temporary difference? Please guide.

    June 7, 2020 at 12:57 pm #573057
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3431
    • ☆☆☆☆☆

    Depends on tax system – often tax relief given on rents paid rather than depreciation and finance cost

    But in the exam:

    (Carrying amount of liability – right of use asset) x tax rate = Deferred tax asset

    Maximum 2 marks so don’t spend too long on it!

    June 7, 2020 at 12:59 pm #573058
    mayurdhruv
    Participant
    • Topics: 1
    • Replies: 4
    • ☆

    Thank you Sir!

    June 7, 2020 at 1:00 pm #573060
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3431
    • ☆☆☆☆☆

    What a quick reply! Have a great day.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Question on Deferred Tax on Lease Liability’ is closed to new replies.

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