Supa$-$Build $($Pty$)$ Ltd is a construction enterprise with a reporting period date of $31$ December of each year.

Supa$-$Build $($Pty$)$ Ltd has a profit before tax of R$1875000$ and R$1500000$ for the reporting periods ended $31$

December $2021$ and $31$ December $2022$ respectively.

Additional information:

$1.$ On $31$ December $2022$ the balance on the deposits received in advance amounts to R$62500(2021$

R$37500)$ for construction projects that have not yet commenced. In terms of SARS legislation, these

amounts will be taxed in the year they are received. No deposits were received before $1$ January $2021$

$2.$ Supa$-$Build $($Pty$)$ Ltd replaced its old manufacturing plant on $1$ January $2022$ and put it into production

immediately. The information about the plants are as follows:

New Plant Old Plant

Cost price $37500001875000$

Carrying amount $-31$ December $2020-1175000$

Tax base $-31$ December $2020-1125000$

Depreciation method Straight$-$line Straight$-$line

Useful life $5$ years $5$ years

Residual value $($only for accounting purposes$)250000125000$

Tax Wear & Tear allowance $($Yr$1/2/3)50/25/25\%20\%$ p$.$a$.$

The old plant was sold for R$1000000.$

$3.$ The following items were included in calculation of the profit before tax:

$20222021$

Dividend received $6250037500$

Fines paid $3000-$

Legal fees paid $300005000$

R$25000(2021-$ Rnil$)$ of the legal fees of $2022$ were tax deductible.

$4.$ Assume a standard tax rate for normal company tax for all years as $28\%.$

$5.$ The balance of the deferred tax account on $31$ December $2020$ only related to the manufacturing plant.

$6.$ VAT and Dividend Tax may be ignored.

REQUIRED:

a$)$ Calculate the deferred tax liability$/($asset$)$ of Supa$-$Build $($Pty$)$ Ltd on $31$ December $2021$ and $2022.$

$(12)$

b$)$ Calculate deferred tax expense for the $2021$ and $2022$ financial years. Hint: first prepare the normal tax

payable calculation for Supa$-$Build $($Pty$)$ Ltd for the reporting periods ended $31$ December $2021$ and

$2022.$ Use the comprehensive approach according to IAS $12($AC $102)$ Income taxes. $(18)$