Maju Bhd acquired 100% of the shares of Roland Berhad on 31 December 2020. It paid RM30
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Question:
Maju Bhd acquired 100% of the shares of Roland Berhad on 31 December 2020. It paid RM30 million to acquire the shares. In 2019, Roland’s Berhad’s carrying amount of plant and equipment was RM40 million and tax written down value (tax base) was RM35 million. Tax rate for 2019 was 25%. Roland Berhad had not taken into account of deferred tax. The following transactions took place during 2020:
- During the year plant was revalued and surplus was RM7 million. Gains on revaluation are taxable on sale at 15%. At the end of the year, the carrying amount of plant was RM45 million and tax written down (tax base) was RM30 million. The company made a capital gain of RM1million. on the sale of another piece of property. The gain is taxable at the Real Property Gain Tax rate of 15%.
- Development expenditure of RM14 million was capitalized in accordance with MFRS138 but is deducted for tax purpose. Tax is deductible only when development cost is incurred. There was no amortization during the year.
- Roland Bhd has recognized income receivable of RM3 million but none has been received yet. Income is only taxable when received.
- Roland has made provision for oil spill clean-up of RM2 million. The expenditure will be tax deductible when incurred only.
- The trade receivables were disclosed at RM3.7 million after providing for doubtful debts of RM375,000. Doubtful debt provision does not attract tax benefit because it is not incurred.
- Financial instruments were classified as held-for-trading at Fair value(FV) of RM10 million. The cost of these financial instruments was RM8.5 million.
- On 1 July 2020 , Roland borrowed RM10,000,000 from Am Bank at 6 % and interest repayable on 30 June 2021.
- During the year there was a rental received in advanced amounting RM1.2million.
(vi) The tax payable for the year was calculated at RM3.5 million and tax rate for the year was 24%.
Required:
- Prepare a table showing the carrying amounts, tax base and temporary differences for each of the items above as at 31 December 2020.
- Calculate the amount of tax expenses as charged in the income statement and the balance in the Deferred Tax Liability in the Statement Of Financial Position as at 31 December 2020.
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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