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IAS - 12 (DEFERRED TAX) (Exercise)

The document provides information about the calculation of current and deferred tax expense for a company over multiple years. It includes the taxable income, tax rates, current tax payable, and calculations of deferred tax assets and liabilities that result from temporary differences between accounting income and taxable income. Journal entries are presented to record the income tax expense, along with balance sheet and income statement presentations of the current and deferred tax amounts.

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Saad Athar
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38 views8 pages

IAS - 12 (DEFERRED TAX) (Exercise)

The document provides information about the calculation of current and deferred tax expense for a company over multiple years. It includes the taxable income, tax rates, current tax payable, and calculations of deferred tax assets and liabilities that result from temporary differences between accounting income and taxable income. Journal entries are presented to record the income tax expense, along with balance sheet and income statement presentations of the current and deferred tax amounts.

Uploaded by

Saad Athar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Total Taxable Temporary Difference 180000

Financial Income 2014 300000


Tax Rate 30%

Calculation of Taxable Income


Pretax Financial Income 300000
Taxable Difference -180000
Taxable Income 120000 (i)

Current Tax Expense 36000

Deferred Tax
Current Liability 16500
Non-Current Liability 37500
Total Deferred Tax 54000

Journal Entry (ii)


Income Tax Expense 90000 Dr.
Deferred Tax Liability 54000 Cr.
Current Tax Payable 36000 Cr.

Income Statement (iii)


Profit Before Tax 300000
Tax Expense
Normal Tax 36000
Deferred Tax 54000 90000
Profit After Tax 210000
Pretax Financial Income 300000
Rent Received in Advance 20000
Excess of Tax Depreciation 40000
Tax Rate 40%

Taxable Income (2013)


Pretax Financial Income 300000
Taxable emporary Difference -40000
Deductable Temporary Difference 20000
Taxable Income 280000

Current Tax 112000


Deferred Tax liability
Deferred Tax Deferred Tax Asset
Taxable Temporary Difference 40000
Deductable Temporary Difference 20000

Presentation of Deferred Tax


Current Assets
Deferred Tax Asset 8000
Current Liablities
Deferred Tax Liability 4000

Non-Current Liability
Deferred Tax liability 12000

Journal Entry (b)


Income Tax Expense 120000
Deferred Tax Asset 8000
Deferred Tax Liability 16000
Current Tax Payable 112000

Journal Entry (c)


Income Tax Expense 134000
Deferred Tax Liability 4000
Deferred Tax Asset 8000
Current Tax Payable 130000
16000
8000
2014
Opening Deferred Tax Liability 92000
Cumulative Temporary Differences 350000
Pretax Finanical Income 525000
Taxable Financial Income 405000
Tax Rate 40%

Net Taxable Temporary Differences 120000


Deferred Tax Liability Increase 48000

Deferred Tax
Op. 92000

Cl Bal 140000 Increase 48000

140000 140000

Income Tax Payable


Taxable Income 405000
Tax Rate 40%
Current Tax Payable 162000 (i)

Journal Entry
Income Tax Expense 210000
Deferred Tax Liability 48000
Current Tax Payable 162000 (ii)

Income Statement
Profit Before Tax 525000
Income Tax
Normal Tax 162000
Deferred Tax 48000 210000
Profit After Tax 315000 (iii)
Pretax Financial Income 70000
Depreciation (TTD) 16000 4800
Rent (DTD) 22000 6600
Fines (PD) 11000
Tax Rate 30%

Taxable Income
Pretax Financial Income 70000
Depreciation -16000
Rent 22000
Fines 11000
Taxable Income 87000

Current Tax 26100

Journal Entry
Income Tax Expense 24300
Deferred Tax Asset 6600
Deferred Tax Liability 4800
Current Tax Payable 26100

Income Statement
Profit Before Tax 70000
Income Tax
Normal Tax 26100
Deferred Tax -1800 24300
Profit After Tax 45700

Effective Tax Rate 34.71%


Op Deferred Tax Liability 40000 100000
Op Deferred Tax Asset 0
Taxable Income 95000
Pretax Financial Income 200000
Cl Taxable Difference 240000 96000
Cl Deductable Difference 35000 14000
Tax Rate 40%

Tax Payable
Profit Before Tax 200000
Taxable Difference -140000
Deductable TD 35000
Taxable Income 95000

Current Tax Payable 38000

Deferred Tax
Op 40000
Closing 96000 Increase 56000
96000 96000

Journal Entry
Income Tax Expense 80000
Deferred Tax Asset 14000
Deferred Tax Liability 56000
Current Tax Payable 38000

Income Statement
Profit Before Tax 200000
Income Tax
Normal Tax 38000
Deferred Tax 42000 80000
Profit After Tax 120000
Deferred Tax
Warr (20000) 8000 Dep (30000) 12000
Closing 4000
12000 12000
Warr (10000) 4000 Opening 4000
Closing 16000 Dep (40000) 16000
20000 20000
Warr (8000) 3200 Opening 16000
Closing 16800 Dep (10000) 4000
20000 20000

2014
Taxable Income 830000
Tax Expense 332000 2016
Current Assets
Income Tax Expense 336000 Deferred Tax Asset
Deferred Tax Liability 4000
Current Tax Liability 332000 Non-Current Liabilities
Deferred Tax Liability
2015
Taxable Income 880000
Tax Expense 352000 Income Statement
Profit Before Tax
Income Tax Expense 364000 Income Tax
Deferred Tax Liability 12000 Normal Tax
Current Tax Liability 352000 Deferred Tax
Profit After Tax
2016
Taxable Income 943000
Tax Expense 377200

Income Tax Expense 378000


Deferred Tax Liability 800
Current Tax Liability 377200
3200

ent Liabilities
Tax Liability 20000

2016
945000

377200
800 378000
567000

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