Solutions to GAAP : Graded Questions Taxation: Deferred taxation

Solution 6.2

a) Deferred tax computation

Carrying Tax Temporary Deferred

amount base difference tax (30%)
C C C C
Asset-cost 300 300 0 0
Accumulated depreciation / 6
Tax allowance 100 80 20
20
200 220 6 (A)
(Deductible)

b) Deferred tax journal

Dr Deferred tax: income tax (A) 6

Cr Income tax expense (P/L) 6

c) Current tax computation

x 0.30
Profit before taxation 1 000
Permanent differences 0
1 000
Temporary differences -
+ Depreciation 100
- Tax allowance (80)
Taxable profit 1 020 306 Dr TE Cr CTP

d) Current tax journal

Dr Income tax expense (P/L) 306

Cr Current tax payable: income tax (L) 306

e) SOCI

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 20X4
C
Profit before taxation 1 000
Income tax expense (306 - 6) (300)
700

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