Financial Reporting - Deferred tax
Hi
I’m struggling to understand this section of a question. Iunderstand (sort of) what deferred tax is but cannot understand what the ‘note’is saying.
The deferred tax provision at 31 March 2013 is to be adjusted (throughthe income statement) to reflect that the tax base of the company’s net assetsis £6 million less than their carrying amounts. The rate of corporation tax is30%
I have a provision already in place on the Trial Balance for£2.6m which I presume has already been accounting for in the Income Statement previouslyso I know that this is requiring an adjustment. What I don’t understand is howto calculate the new provision.
I don’t suppose this is something simple like I have tocalculate 30% of the £6m which would give me £1.8m resulting in an adjustmentof £0.8m. Seems to easy given the rest of the question!!!!!
If I am correct, then it says it is adjusted through theincome statement, would this be through the tax?
Many thanks for your help!
PROBLEM NOW SOLVED AND I THINK I WAS RIGHT!!
I’m struggling to understand this section of a question. Iunderstand (sort of) what deferred tax is but cannot understand what the ‘note’is saying.
The deferred tax provision at 31 March 2013 is to be adjusted (throughthe income statement) to reflect that the tax base of the company’s net assetsis £6 million less than their carrying amounts. The rate of corporation tax is30%
I have a provision already in place on the Trial Balance for£2.6m which I presume has already been accounting for in the Income Statement previouslyso I know that this is requiring an adjustment. What I don’t understand is howto calculate the new provision.
I don’t suppose this is something simple like I have tocalculate 30% of the £6m which would give me £1.8m resulting in an adjustmentof £0.8m. Seems to easy given the rest of the question!!!!!
If I am correct, then it says it is adjusted through theincome statement, would this be through the tax?
Many thanks for your help!
PROBLEM NOW SOLVED AND I THINK I WAS RIGHT!!
(edited 10 years ago)
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