AB acquired non-current assets on 1 April 2003 costing $250,000. The assets qualified for accelerated first year
Question:
AB acquired non-current assets on 1 April 2003 costing $250,000. The assets qualified for accelerated first year tax allowance at the rate of 50% for the first year. The second and subsequent years were at a tax depreciation rate of 25% per year on the reducing balance method. AB depreciates all non-current assets at 20% a year on the straight line basis. The rate of corporate income tax applying to AB for 2003/04 and 2004/05 was 30%. Assume AB has no other qualifying non-current assets.
Apply IAS 12 Income Taxes and calculate:
(a) the deferred tax balance required at 31 March 2004;
(b) the deferred tax balance required at 31 March 2005;
(c) the charge to the income statement for the year ended 31 March 2005.
Fundamentals of Physics
ISBN: 978-0471758013
8th Extended edition
Authors: Jearl Walker, Halliday Resnick