QUESTION $4$

Prison Limited commenced operations on $1$ January $2020.$

The corporate normal tax rate is $28\%$

Details of Prison Limited's liabilities at $31$ December $2020$ are as follows:

i bank overdraft R$2000$

ii accrued expense water and electricity R$3000($assume deductible for tax purposes in $2020)$

iii accrued expense penalties for VAT R$5000$

iv trade creditors of $R3000$

v interest$-$bearing non$-$current liabilities of R$6000$

vi warranty provision of R$5000$

vii payments from customers $($for goods$)$ received in advance R$8000$

The company may recognise debit deferred tax balances as it is probable that taxable profits will be earned in the near future.

Required:

Part a

For each of the liabilities listed above determine:

carrying amount

tax base

temporary difference

deferred tax balance $($statement of financial position$)$

whether the deferred taxation balance $($statement of financial position$)$ is an asset or liability

Part b

Draft the journal entry relating to deferred tax for the year ended $31$ December $2020$