. An entity bought an asset on January 1, 2018 at a purchase price of $8...
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. An entity bought an asset on January 1, 2018 at a purchase price of $8 million. The entity also incurred freight and custom duties of $200,000 and $1.8 million respectively. The asset is depreciated over a period of ten years using a straight line basis in accordance with the entity's depreciation policy. However, the rate of capital allowance on similar assets is currently 25% reducing balance. The income tax rate enacted recently was 30% relating to all corporate entities. Required: Assuming there are no other transactions with deferred tax implications: a) determine the deferred tax balance and the movement for 2018 b) determine the deferred tax balance and the movement for 2019 c) explain how the deferred tax balance and its movement year over year would be reported in the entity's 2019 financial statements. d) explain how deferred tax assets are reported. . An entity bought an asset on January 1, 2018 at a purchase price of $8 million. The entity also incurred freight and custom duties of $200,000 and $1.8 million respectively. The asset is depreciated over a period of ten years using a straight line basis in accordance with the entity's depreciation policy. However, the rate of capital allowance on similar assets is currently 25% reducing balance. The income tax rate enacted recently was 30% relating to all corporate entities. Required: Assuming there are no other transactions with deferred tax implications: a) determine the deferred tax balance and the movement for 2018 b) determine the deferred tax balance and the movement for 2019 c) explain how the deferred tax balance and its movement year over year would be reported in the entity's 2019 financial statements. d) explain how deferred tax assets are reported.
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Answer rating: 100% (QA)
a Deferred Tax Balance and Movement for 2018 The deferred tax balance for 2018 is calculated as the difference between the taxable amount and the amou... View the full answer
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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