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  • Format Deferred Tax

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    SARASVATHYDEVI SUBRAMANIAM
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    This document discusses the calculation of deferred tax liabilities for depreciation using a 4-step process. Step 1 calculates temporary differences between the carrying amount and tax base. Step 2 determines the deferred tax liability by multiplying temporary differences by the tax rate. Step 3 accounts for movements in the deferred tax liability balance. Step 4 calculates the total tax charge by combining the current tax charge and any increase or decrease to the deferred tax liability.

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    DEFERRED TAX

    Original Title

    FORMAT DEFERRED TAX

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    This document discusses the calculation of deferred tax liabilities for depreciation using a 4-step process. Step 1 calculates temporary differences between the carrying amount and tax base. Step 2 determines the deferred tax liability by multiplying temporary differences by the tax rate. Step 3 accounts for movements in the deferred tax liability balance. Step 4 calculates the total tax charge by combining the current tax charge and any increase or decrease to the deferred tax liability.

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    7 views2 pages

    Format Deferred Tax

    Uploaded by

    SARASVATHYDEVI SUBRAMANIAM
    This document discusses the calculation of deferred tax liabilities for depreciation using a 4-step process. Step 1 calculates temporary differences between the carrying amount and tax base. Step 2 determines the deferred tax liability by multiplying temporary differences by the tax rate. Step 3 accounts for movements in the deferred tax liability balance. Step 4 calculates the total tax charge by combining the current tax charge and any increase or decrease to the deferred tax liability.

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    of 2

    CHAPTER : DEFERRED TAX

    SCENARIO 1 = DEPRECIATION

    STEP 1 : CALCULATING THE TEMPORARY DIFFERENCES


     
    At the end of Year 1: £
     
    Carry Amount (Cost - Depreciation) XXXX
    Tax Base (Cost - (Cost X TB %)) XXXX
    Temporary differences XXXX

    ***TAX BASE ON REDUCING BALANCE


    YEAR 1 = (COST - (COST X TB% )) = TAX BASE
    YEAR 2 = (Y1 TB - (TB X TB% )) = TAX BASE

    STEP 2 : CALCULATE DTL


     
    DTL = TEMPORARY DIFFERENCES X TAX RATE%

    STEP 3 : ACCOUNT FOR THE MOVEMENT ON DTL


     
    DTL B/F XXXX
    REQUIRED DTL AT THE YEAR END XXXX
    NEED TO INCREASE / DECREASE DTL BY XXXX

    DTL INCREASE DTL DECREASE

    DT P & L DT DTL
    XXX XXX
    CR DTL XXX CR P & L XXX

    STEP 4 : CALCULATE TOTAL TAX CHARGE


     
    CURRENT TAX CHARGE XXXX
    (-)/(+) DECREASE / INCREASE DTL XXXX
    TOTAL TAX CHARGE XXXX

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