IAS 12 – BT1

1.
a. Company ABC
Tax computations for 20x1 and 20x2
20x1 20x2
Accounting income 800 000 1 000 000
Add / (less)
Income earned from foreign sources (25 000) (18 000)
Dividend income received 0 33 000

Tax- exempt dividend (40 000) (35 000)

Depreciation IA (KT) 0 8 000

Depreciation IA (Tax) (40 000) 0

Depreciation 66 000 88 000

Capital allowances (150 000) (150 000)

Trade marks amortization 7 500 7 500

Unrealized exchange gains (5 000) (8 000)

Gains materialized 0 5 000

Fair value gains (70 000) (65 000)

Taxable income 543 500 865 500

Tax payable 119 570 181 755

b. Cumulative temporary different

20X1 CA TB Cumulative tem dif
Dividend receivable 25000 0 25 000
Intangible asset 40 000 0 40 000
PPE 450 000 – 66 000 450 000 – 150 000 84 000
=384 000 = 300 000
Unrealized exchange 5000 0 5 000
gains
Investment at FV 1 270 000 1 200 000 70 000
Net taxable temporary dif. 224 000

20x2 CA TB Cumulative tem dif

Dividend receivable 10 000 0 10 000
Intangible asset 40 000 – 8 000 0 32 000
 =32 000
PPE 450 000 – 66 000 – 450 000 – 150 000 146 000
88 000 -150 000
=296 000 = 150 000
Unrealized exchange 8 000 0 8 000
gains
Investment at FV 1 335 000 1 200 000 135 000
Net taxable temporary dif. 331 000

Taxable temporary dif.

Năm 20x1 :
beginning: 0
end: 224 000
Change : 224 000

Năm 20x2 :
beginning: 224 000
end: 331 000
Change : 107 000

c. Movement in deferred tax liability :

20x1 :
beginning: 0
end: 49 280
Change : 49 280

20x2 :
beginning: 49 280
end: 69 510
Change : 20 230

2. Journal entries
20x1:
Dr Tax expense 168 850
Cr Deferred tax liability 49 280
Cr Tax payable 119 570

20x1:
Dr Tax expense 201 985
Cr Deferred tax liability 20 230
Cr Tax payable 181 755
3. Analytical check on tax expense:
20x1 20x2
Profit before tax 800 000 1 000 000
Adjusting for permanent dif. (32 500) (27 500)
Profit after adjusting 767 500 972 500
Tax on profit after adjusting 168 850 204 225
Effect of change in tax rates on (2 240)
beginning deferred tax
Tax expense 168 850 201 985