Fred was incorporated on January 1, 2015. In the year ended December 31, 2015 the company made a profit before taxation of $121,000.
This figure was after a depreciation charge of $11,000.
During the period Fred made the following capital additions:
Plant $48,000
Motor vehicles $12,000
Tax allowances for 2015 are $15,000.
Corporate tax is chargeable at the rate of 40%.
Required:
(a) Calculate the corporate income tax liability for the year ended December 31, 2015.
(b) Calculate the deferred tax balance that is required in the statement of financial position as at December 31, 2015.
(c) Prepare a note showing the movement on the deferred tax account and thus calculate the deferred tax charge for the year ended 31 December 2015.
(d) Prepare the note which analyses the tax expense for the year ended 31 December 2015.
(e) Prepare a note which reconciles accounting profit multiply by the applicable tax rate and the tax expense.
(f) Prepare a note to the statement of financial position showing the movement on deferred tax in respect of each type of temporary difference.