• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Tax

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Tax

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 15, 2017 at 8:43 pm #378397
    firelion28
    Member
    • Topics: 159
    • Replies: 83
    • ☆☆☆

    In December 20X5, Mighty IT Co revalued its corporate headquarters. Prior to the revaluation, the carrying amount of the
    building was $2m and it was revalued to $2·5m.
    Mighty IT Co also revalued a sales office on the same date. The office had been purchased for $500,000 earlier in the
    year, but subsequent discovery of defects reduced its value to $400,000. No depreciation had been charged on the sales
    office and any impairment loss is allowable for tax purposes.
    Mighty It Co’s income tax rate is 30%.

    In accordance with IAS 12 Income Taxes, what is the impact of the property revaluations on the income tax
    expense of Mighty IT Co for the year ended 31 December 20X5?
    A Income tax expense increases by $180,000
    B Income tax expense increases by $120,000
    C Income tax expense decreases by $30,000
    D No impact on income tax expense

    I am not unable to understand how they got the answer

    The carrying value is 400,000 and since for tax purposes they allow impairment,the tax base is 400000 so there shud be no impact on tax but why the answer is C

    March 15, 2017 at 11:20 pm #378404
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    Because we are writing off $100,000 impairment and it’s allowable for tax so it will reduce the tax expense by 30% of $100,000 = $30,000

    Is this a past exam question? I don’t recognise it!

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Tax’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • Ark1 on Pricing strategies – ACCA Performance Management (PM)
  • John Moffat on Accruals and Prepayments – ACCA Audit and Assurance (AA)
  • Rutjay on Accruals and Prepayments – ACCA Audit and Assurance (AA)
  • finance123 on Investment Appraisal – NPV, IRR – ACCA Management Accounting (MA)
  • Rashi@gupta on FA Chapter 4 Questions Accruals and Prepayments

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in