Reference no: EM132546046

Deedar Limited has provided you the following information for determining its current tax and deferred tax expense for the year 2006:

i) During the year ended December 31, 2006, the company's accounting profit before tax amounted Rs. 30 million. The profit includes capital gains amounting to Rs. 8 million which are exempt from tax.

ii) The accounting written down values of the fixed assets, as at December 31, 2005were as follows:

                                     Cost                Accumulated depreciation            Written down value

------------------Rs. in million------------

Machinery                  200                          25                                          175

Furniture and fixture      50                          10                                          40

No additions or disposals of fixed assets were made in the years 2006.

iii) Machinery was acquired on January 1, 2005 and is being depreciated on straight line basis over its estimated useful life of 8 years. The tax base of machinery as at December 31, 2005 was Rs. 90 million.

iv) Furniture and fittings are also depreciated on the straight line basis at the rate of 10% per annum. The tax base of furniture and fittings as at December 31, 2005 was Rs. 40.5 million.

v) Normal rate of tax depreciation on both types of assets is 10% on written down value.

vi) The tax rates for 2005 and 2006 was 35%

Required:

Question 1: Determine the current tax and deferred tax expense for the year 2006