Jiki Berhad has the following financial statement as at 31 December 2019:

Jiki Berhad

Statement of Financial Position as at 31 December 2019

Assets (RM)

Plant (Net) 4,000,000

Research and Development 16,000,000

Cash 5,400,000

Trade Receivable (Net) 5,400,000

Interest Receivable 800,000

Inventory 2,000,000

Total Assets 33,600,000

Liabilities and Shareholders’ Equity

Trade Payable 5,920,000

Loan Payable 9,300,000

Provision for warranties 300,000

Deferred tax liability 4,200,000

Share Capital 10,380,000

Retained Earnings 3,500,000

Total Liabilities and Shareholders’ Equity 33,600,000

Additional Information:

a) Tax laws allow only specific bad debts. The carrying amount in the trade receivable account is after the provision of 10% provision of doubtful debts.

b) Interest receivable is recorded on accrued basis however is taxable only upon receipt.

c) The carrying amount of the plant is after providing accumulated depreciation of RM 6 million. As of 31 December 2019, the total capital allowance given to the plant is RM 7.2 million. The plant was acquired on 1 January 2017 and the expected useful life is 5 years

d) Tax laws allow the research and development costs to be written off immediately upon incurred.

e) Tax laws allow the warranty costs to be claimed upon incurred.

f) Tax rate has been reduced from 35% (last year) to 30% (this year).

g) The balance in the deferred tax liability account is the carried forward balance from the last accounting period.

Required:

In accordance with MFRS 112: Income Taxes, calculate the amount of deferred tax and tax expenses charged in the financial statement of Jiki Berhad for the year 2019.

Answer rating: 100% (QA)

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