Question $5$

Co X has a building from which it currently earns rental income. The property is

measured at fair value in accordance with IAS $40$ and the carrying amount as of

$31$ December $20$X$9$ is CU $200.$ For tax purposes, the building is depreciated over

$25$ years, and the tax base as of $31$ December $20$X$9$ amounts to CU $135.$ Co X$\text{'}$s

business model is to hold properties for strategic purposes $($i$.$e$.,$ it consumes

substantially all of the investment properties' economic benefits through rental

income$).$ The tax rate applicable to sale of investment property is $10\%,$ while the

tax rate applicable to other taxable profits is $30\%.$ Determine the deferred tax

balance as of $31$ December $20$X$9$:

CU $0$ Deferred tax liability

CU $19\mathrm{.}5$ Deferred tax liability

CU $6\mathrm{.}5$ Deferred tax liability

CU $20$ Deferred tax liability