Reference no: EM132979392

Question - Stone Ltd purchases an item of machinery on 1 August 2018 for £330,000. The item has an estimated useful life of 15 years and is depreciated on a straight-line basis. According to the tax authority, tax allowances can be claimed at 25% on a straight-line basis. The tax rate can be taken as 30%. In respect of the item of machinery, calculate the deferred tax charge in the company's statement of profit and loss for the year to 31 July 2020 and the deferred tax provision balance in the statement of financial position at that date. (Choose the answer closest to your calculations.)

A. Deferred tax charge of £16,350 and Deferred tax provision of £26,100

B. Deferred tax charge of £18,150 and Deferred tax provision of £36,300

C. Deferred tax charge of £16,350 and Deferred tax provision of £54,450

D. Deferred tax charge of £18,150 and Deferred tax provision of £18,150