Differentiate between Current Taxation and Deferred Taxation (5 marks)

b) On 1 January 2020, Falcon Limited bought a Truck for $2,500,000 and decided to depreciate the asset at 25% per annum on cost with nil residual value The local tax authorities however allowed depreciation (capital allowance) on the truck at 20% per annum on cost. Calculate the deferred taxation to be provided for the first two years, and indicate if this results in a deferred tax asset or deferred tax liability. (6 marks)

c) Explain three (3) benefits of preparing a statement of cash flows to the managers of a company (9 marks