Honda Corporation Limited (Honda) is a company operating in the trading of domestic appliance products. It...

 

 

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Honda Corporation Limited (Honda) is a company operating in the trading of domestic appliance products. It was commenced on 1 April 2021 and has a financial year ended date at 31 March. Since it is carrying on trading in Hong Kong Special Administrative Region, it is subject to Hong Kong profit tax at 16.5%. Assuming near the end of fiscal year of 2021/22 (i.e. February 2022), the Financial Secretary of HKSAR announced the company profit tax rate increased from 16.5% to 18%, effective April 1, 2023. If Honda has temporary differences at 1 April 2022 related to $4.5 million due to greater depreciation on tax return than on the income statement. The taxable amounts related to these differences are scheduled to occur equally in 2022, 2023 and 2024. Required 1. Calculate deferred tax assets / liability before the tax rate change (2 marks) 2. Calculate deferred tax assets / liability after the tax rate change (3 marks) Honda Corporation Limited (Honda) is a company operating in the trading of domestic appliance products. It was commenced on 1 April 2021 and has a financial year ended date at 31 March. Since it is carrying on trading in Hong Kong Special Administrative Region, it is subject to Hong Kong profit tax at 16.5%. Assuming near the end of fiscal year of 2021/22 (i.e. February 2022), the Financial Secretary of HKSAR announced the company profit tax rate increased from 16.5% to 18%, effective April 1, 2023. If Honda has temporary differences at 1 April 2022 related to $4.5 million due to greater depreciation on tax return than on the income statement. The taxable amounts related to these differences are scheduled to occur equally in 2022, 2023 and 2024. Required 1. Calculate deferred tax assets / liability before the tax rate change (2 marks) 2. Calculate deferred tax assets / liability after the tax rate change (3 marks)

Answer rating: 100% (QA)

Answer 1 Deferred tax liability before the tax rate change 742500 Explanation iThe difference arisin... View the full answer