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  • Deferred Tax - Class Activity 1

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    SARASVATHYDEVI SUBRAMANIAM
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    This document discusses deferred tax liabilities related to depreciation. It outlines 4 steps: 1) Calculating temporary differences between tax and accounting values; 2) Determining deferred tax liability by multiplying temporary differences by the tax rate; 3) Accounting for changes in the deferred tax liability from the beginning to end of the year; 4) Calculating the total tax charge including changes to the deferred tax liability.

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    DEFERRED TAX

    Original Title

    DEFERRED TAX - CLASS ACTIVITY 1

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    This document discusses deferred tax liabilities related to depreciation. It outlines 4 steps: 1) Calculating temporary differences between tax and accounting values; 2) Determining deferred tax liability by multiplying temporary differences by the tax rate; 3) Accounting for changes in the deferred tax liability from the beginning to end of the year; 4) Calculating the total tax charge including changes to the deferred tax liability.

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    © All Rights Reserved
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    4 views2 pages

    Deferred Tax - Class Activity 1

    Uploaded by

    SARASVATHYDEVI SUBRAMANIAM
    This document discusses deferred tax liabilities related to depreciation. It outlines 4 steps: 1) Calculating temporary differences between tax and accounting values; 2) Determining deferred tax liability by multiplying temporary differences by the tax rate; 3) Accounting for changes in the deferred tax liability from the beginning to end of the year; 4) Calculating the total tax charge including changes to the deferred tax liability.

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    © All Rights Reserved
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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
    Tax Base
    Temporary differences

    STEP 2 : CALCULATE DTL


     
    DTL = TEMPORARY DIFFERENCES X TAX RATE%

    STEP 3 : ACCOUNT FOR THE MOVEMENT ON DTL


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

    DTL INCREASE DTL DECREASE


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

    STEP 4 : CALCULATE TOTAL TAX CHARGE


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

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