Prepare extracts from the statement of profit or loss

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Question - Aquarius Ltd's draft financial statements for the year ended 31 December 20X9 show a profit before tax of R170,000. At 31 December 20X9 there are cumulative taxable temporary differences of R50,000, i.e. the carrying value of the net assets is higher than the tax base by this amount. Current tax for the year at 30% has been estimated at R33,000.

For the year ended 31 December 20X8 the financial statements had a profit before tax of R145,000. At 31 December 20X8 the cumulative taxable temporary differences were R40,000 and current tax for the year at 30% was R30,000.

Required - For the years ended 31 December 20X8 and 31 December 20X9:

(a) Prepare the journal entry to record deferred tax for the years ended 31 December 20X8 and 20X9 (5)

(b) Prepare extracts from the statement of profit or loss for the year ended 31 December 20X9 and the statement of financial position at 31 December 20X9, both with comparatives, showing how the current and deferred tax would be reflected.

Reference no: EM133073363

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