Question 3 Balance Sheet at January 1, 2008

Property, plant & equipment Goodwill Intangible assets Financial assets Total non-current assets Trade and other receivables Other receivables Cash and cash equivalents Total current assets Total assets Interest-bearing loans Trade and other payables Employee benefits Current tax liability Deferred tax liability Total liabilities Issued Capital Revaluation Reserve Retained earnings Total equity Total equity and liabilities $M 7,000 3,000 2,000 6,000 18,000 7,000 1,600 700 9,300 27,300 8,000 4,000 1,000 70 600 13,670 6,000 1,500 6,130 13,630 27,300

Adjustment $M

(400) [see note 3] 500 [see note 3] 100

Adjusted Carrying Value $M 7,000 *NR 1,600 6,500 15,100 7,000 1,600 700 9,300 24,400 8,000 4,000 1,050 70 600 13720

Tax base $M 1,400 *NR 0 7,000 8,400 7,500 1,600 700 9,800 18,200 8,500 3,800 1,000 70 600 13,970

Temporary difference $M 5,600 1,600 (500)

(500) 6,200 500 (200) (50) 250

100

50 [see note 3]

50

NO INCOME TAX CHARGED, AS THESE ARE EQUITY. IN THE CASE OF RETAINED EARNINGS, THE TAX PAYABLE/REFUNDABLE WOULD HAVE BEEN ADJUSTED FROM INCOME STATEMENT

6,450

Therefore, deferred tax provision is $6,450 x 30% = $1,935. *NR Not recognized for deferred tax purposes.