On 1 January x4, the deferred tax liability brought forward for Lilac Bhd was RM

Question

On 1 January x4, the deferred tax liability brought forward for Lilac Bhd was RM45,000. At 31 December x4, you were asked to calculate the amount of deferred tax charged in the statement of profit or loss and other comprehensive income.

Additional information:

a. Property does not enjoy any tax relief or capital allowances.

b. Tax depreciatd value of plant was RM100,000.

c. Tax rule allows full deduction for research and development when incurred.

d. Tax rules allow cash spent on actual repairs and refunds on warranties given.

e. Tax rate is 30%.

Posted by: Iswan Shah

Statement of Financial Position (Extract) RM RM Assets a) Property at cost Accumulated Depreciation 1,500,000 (500,000) 1,000 000 b) Plant 800,000 Depreciation 200,000 600,000 c) Research and development 500,000 Accumulated amortisation (300,000200,000 Liabilities d) Provision for warranties 35,000

Explanation / Answer

Statement Showing Carrying value and tax base and temporay differences (Amount in RM)

Temporary Differences(DTL) 700,000 RM

Temporary Differences(DTA) (35,000) RM

Net Temporary Differences(DTL) 665,000 RM

DTL on 31 December, x4 (665,000*30%) 199,500 RM

Less: Opening DTL (45,000) RM

Charged to Statement of P&L 154,500 RM

Particulars Carrying Value Tax Base Temporary Difference(DTL) Temporary Difference(DTA) Property 1,000,000 1,000,000 - - Plant 600,000 100,000 500,000 - Research and Development 200,000 0 200,000 - Provision for warranties 35,000 0 - 35,000 Total 700,000 35,000

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