Assets Cost 60000

Useful life 3
Taxable income when 100% WDV depreciation Reported income when SLM deoeciation
Year 1 2 3 Year 1
EBITDA 80000 80000 80000 EBITDA 80000
Depreciation 60000 0 0 Depreciation 20000
EBIT 20000 80000 80000 EBIT 60000
Interest 0 0 0 Interest 0
Taxable income 20000 80000 80000 PBT 60000
Tax @ 30% 6000 24000 24000 Tax @ 30% 18000
PAT 14000 56000 56000 PAT 42000
 Income Statement Reporting Balance Sheet Reporting

n SLM deoeciation Income tax expense dr 18000 Deferred tax liability 12000
2 3 Year 1 Income tax payable cr 6000 Deferred tax assets 0
80000 80000 Deferred tax liability cr 12000 Net DTL 12000
20000 20000
60000 60000 Income tax expense dr 18000 Deferred tax liability 12000
0 0 Year 2 Deffered tax assets dr 6000 Deferred tax assets 6000
60000 60000 Income tax payable cr 24000 Net DTL 6000
18000 18000
42000 42000 Income tax expense dr 18000 Deferred tax liability 6000
Year 3 Deffered tax assets dr 6000 Deferred tax assets 6000
Income tax payable cr 24000 Net 0
 Taxable income as per Income tax rules Reported income as per Companies' Act 2013
(provisions not allowed) (provide for provisions)

Year 1 2 3 Year 1 2
Profit before provision 50000 50000 50000 EBIT 50000 50000
Less bad debt 2000 3000 1000 Interest 6000 0
Taxable income 48000 47000 49000 PBT 44000 50000
Tax @ 30% 14400 14100 14700 Tax @ 30% 13200 15000
PAT 33600 32900 34300 PAT 30800 35000
nies' Act 2013
ns)
Income Statement Reporting Balance Sheet Reporting

3 Income tax expense dr 13200 Deferred tax liability 0

50000 Year 1 Deferred tax asset dr 1200 Deferred tax assets 1200
0 Income tax payable cr 14400 Net DTA 1200
50000
15000 Income tax expense dr 15000 Deferred tax liability 900
35000 Year 2 Income tax payable cr 14100 Deferred tax assets 1200
Deffered tax liability cr 900 Net DTA 300

Income tax expense dr 15000 Deferred tax liability 300

Year 3 Income tax payable cr 14700 Deferred tax assets 300
Deffered tax liability cr 300 Net 0