QUESTION $1$

Soon Seng Berhad $($SSB$)$ has a beginning balance of deferred liability amount of RM$500,000$ in

its financial statement as of $31$ December $2023.$ Income tax is at $25\%.$ The tax expenses for the

year $($before adjustments$)$ stood at RM$500,000.$ The following transactions took place during the

year $2023$:

On $1$ January $2023,$ SSB bought a production machine for RM$600,000$ and SSB expects

to use it for five years. The capital allowance for the first year is $40\%.$

Development expenditure of RM$200,000$ was capitalized in accordance with MFRS$138$

but is deducted for tax purposes. Amortization of $20\%$ per annum was charged for the

year.

Penalty expenses of RM$50,000$ were recognized for the year $2023$ as unclaimable

expenses.

SSB has recognized income receivable of RM$500,000,$ but none has been received.

For the year, SSB also provides a provision for a warranty of RM$100,000.$

SSB provides a general provision for doubtful debts of $2\%$ per annum. Trade receivables

at the end of the year were RM$5$ million.

Interest expenses of RM$600,000$ have not been paid.

SBB Bought financial assets for RM$150,000.$ At the end of the year, these financial assets'

value stood at RM$100,000.$ SBB classified these financial assets as Fair Value through

Profit or Loss.

During the year SSB$\text{'}$s plant was revalued, the surplus was RM$1$ million. At the end of the

year, the carrying amount of the plant was RM$5$ million, and tax$-$based was RM$4$ million.

Gains on revaluation are taxable on sale at $5\%.$ SSB has no intention to dispose of the

plant within the next $5$ years.

Required:

a$)$ Differentiate between Temporary and Permanent Differences. Illustrate your answers

through examples.

$(5$ marks$)$

b$)$ In each of the items listed from $(1)$ to $(9)$ calculate the amount of Deferred Tax Liability $($DTL$)$

or Deferred Tax Assets $($DTA$).$ Show the total amount for both the DTL and DTA.

$(20$ marks$)$

c$)$ Calculate the movement in tax expenses based on your answers in part $($b$)$ above.

$(7$ marks$)$

d$)$ Write a journal for each of the items from $(1)$ to $(9)$ in the above questions.

e$)$ Show an extract of SSB$\text{'}$s Statement of Profit or Loss and Other Comprehensive Income

and Statement of Financial Positions as at $31$ December $2023,$

$(7$ marks$)$

$($Total: $55$ marks$)$