DEKO Berhad is in the process to finalized its financial statements. The following is the list of assets and liabilities as at 31 December 2019

Accounts	Carrying amounts (RM)
Property	5,000,000
Equipment	2,000,000
Leasehold land	3,000,000
Prepaid insurance	60,000
Trade receivables	220,000
Accrued dividend	10,000
Unearned rental income	46,000
Trade payable	35,000
Provision for employee benefits	120,000

Additional information:

1. The balance amount of deductible for tax purposes in the future periods relating to the property is RM4,850,000 and the equipment is RM 2,150,000.
2. Leasehold land is a non-qualifying asset.
3. Tax authority use cash basis in determining the income and expenses.
4. The current tax for the financial year ended 31 December 2019 is RM300,000. No balance for deferred tax and the corporate tax rate is 22 percent.

Required:

(a) Discuss why the tax expense in the statement of profit or loss may not same as tax charge by the tax agency.

(b) Prepare a table showing the tax based, temporary difference and deferred tax for each of the above items as at 31 December 2019.

(c) Determine the amount of tax expense as charged in the statement of profit or loss and the deferred tax liability in the statement of financial position as at 31 December 2019.

Answer rating: 100% (QA)

Answer a Tax expenses as per the statement of profit and loss may differ than as charged by tax agen... View the full answer