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In Promulgate’s trial bal. as at 31 Dec.15 there is a liability in respect of deferred tax of $38.4 million and a current liability in respect of current tax of $5.4m.
During the year promulgate’s taxable temporary timing differences increased by $20mof which $12 million related to the revaluation of Promulgate’s property. The deferred tax relating to this revaluation should be charged to the statement of PorL. The income tax promulgate is 20%.
No provision has yet been made for the income tax liability based on this year’s profits not including the revaluaion mention above. The directors have estimated the liability to be in the reigion of $22.8m.
what tax charge in the statement of profit or loss for promulgate for the year ended Dec.2015 ?I got answer $17m , Answer is $21.4m
Open 2 T accounts, 1 for Deferred Tax (DT) and 1 for Current Tax (CT)
DT debit side, narrative “Carried down” the figure 42.4
DT credit side, narrative “Brought forward”, the figure 38.4
DT credit side, narrative “Current Tax”, the figure 4CT debit side, narrative “Deferred Tax”, the figure 4
CT debit d=side, narrative “Carried down”, the figure 22.8CT credit side, narrative “Brought forward”, the figure 5.4
CT credit side, narrative “Profit or Loss Account”, the figure 21.4Can you follow that?
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