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  • Lecture 25 Working Sheet

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    sobian356
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    The document discusses concepts related to deferred tax including temporary differences, deferred tax liability, and deferred tax asset. It provides an example to calculate deferred tax arising from temporary differences between the accounting base and tax base of assets and liabilities. The deferred tax is calculated by quantifying the temporary differences and applying the tax rate of 30%. At the end, a journal entry is passed to record the deferred tax liability, with debit to deferred tax expense and credit to deferred tax liability account.

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    The document discusses concepts related to deferred tax including temporary differences, deferred tax liability, and deferred tax asset. It provides an example to calculate deferred tax arising from temporary differences between the accounting base and tax base of assets and liabilities. The deferred tax is calculated by quantifying the temporary differences and applying the tax rate of 30%. At the end, a journal entry is passed to record the deferred tax liability, with debit to deferred tax expense and credit to deferred tax liability account.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    1 views5 pages

    Lecture 25 Working Sheet

    Uploaded by

    sobian356
    The document discusses concepts related to deferred tax including temporary differences, deferred tax liability, and deferred tax asset. It provides an example to calculate deferred tax arising from temporary differences between the accounting base and tax base of assets and liabilities. The deferred tax is calculated by quantifying the temporary differences and applying the tax rate of 30%. At the end, a journal entry is passed to record the deferred tax liability, with debit to deferred tax expense and credit to deferred tax liability account.

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    © All Rights Reserved
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    of 5

    Accounting profit XXX

    Add: UnAllowed expenses XXX


    Less: Allowable Expenses (XXX)
    Taxable Profit XXX
    Tax Rate 30%
    Current Tax Taxable Profit * Tax Rate

    Differences:
    1) Temprorary Diff
    2) Permenant Diff

    Deferred Tax arises due to temp diff

    Deferred Tax types


    1) Deferred Tax Liability
    2) Deferred Tax Asset

    Acc Tax
    Asset Cost 500,000 500,000
    Life 5 3
    Depreciation 100,000 166,667 66,667

    Year 4
    100,000 -

    Temp Diff Types


    1) Taxable Temp Diff
    2) Dedutible Temp Diff

    Deferred Tax arises only on:


    Assets
    Liabilities

    CA TB Difference Deferred Tax@30%

    Taxable Temp
    Building 400,000 333,333 66,667 Diff 20,000.0

    Taxable Temp
    Commission Receivable 5,000 - 5,000 Diff 1,500.0

    Taxable Temp
    Interest Receivable 3,000 1,000 2,000 Diff 600.0
    Dedutible
    Interest Paybale 8,000 6,000 2,000 Temp Diff (600.0)
    Permenant
    Fine Paybale 5,000 - 5,000 Diff -
    21,500.0

    Asset:
    CA>TB Taxbale Temp Diff Deferred Tax Liablity
    CA<TB Deductible Temp Diff Deferred Tax Asset

    Liability:
    CA>TB Deductible Temp Diff Deferred Tax Asset
    CA<TB Taxbale Temp Diff Deferred Tax Liablity

    DTL Entry Dr Cr
    Deferred Tax Expense 21,500
    Deferred Tax Liability 21,500
    Deferred Tax@30%

    DTL

    DTL

    DTL
    DTA

    DTL
    Particular CA Tax Base Diff Type of Diff Deferred Tax
    Taxable
    Fixed Asset 45,000 50,000 5,000 Temp Diff 1,500.0 DTL
    Interest Taxable
    Receivable 5 - 5 Temp Diff 1.5 DTL
    Interest Dedutible
    Paybale 4 - 4 Temp Diff (1.2) DTA
    Development Taxable
    Cost 500.6 - 500.6 Temp Diff 150.2 DTL
    Land and Taxable
    Building 6,000 4,900.5 1,099.5 Temp Diff 329.8 DTL
    1,980.3 DTL

    DTL
    b/d 1,340.6

    DTE 639.73

    c/d 1,980.33
    1,980.33 1,980.33

    DTE 639.73
    DTL 639.73

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