ACCA FR · Chapter 9 · Question 4 of 8
Scaup Co's deferred tax liability was $60,000 at the start of the year. At the year end its taxable temporary differences, all relating to plant, total $320,000, and the tax rate is 25%. The current tax estimate for the year is $300,000. What is the total tax charge in profit or loss?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) $320,000
Explanation
Closing deferred tax liability = $320,000 x 25% = $80,000. Increase in the year = $80,000 - $60,000 = $20,000, which is charged to profit or loss because it relates to plant. Total tax charge = current tax $300,000 + deferred tax $20,000 = $320,000.
More Taxation MCQs
- Q6Which of the following would normally give rise to a deferred tax ASSET?
- Q7Which of the following statements about measuring deferred tax under IAS 12 is correct?
- Q8At the start of the year Pochard Co had a deferred tax liability of $150,000. During the year taxable temporary differences on plant…
- Q1Last year Teal Co estimated its income tax liability at $400,000, but the amount finally agreed and paid was $430,000. For the current…
- Q2Under IAS 12, deferred tax is calculated on temporary differences. What is a temporary difference?