What deferred tax balance should waloneke recognise

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Question 1: The Waloneke Company has a policy of using non-current assets until they can no longer be operated and are worthless. On 1 January 2017 it acquired an item of plant and machinery for Tk.100,000. It is being depreciated over 10 years on a straight-line basis. For tax purposes there is an allowance of 20% per annum on a reducing balance basis. There are two rates of tax: 15% on trading profits and 25% on gains on disposals. What deferred tax balance should Waloneke recognise at 31 December 2017, according to IAS12 Income taxes?

Question 2: The Kolpa Company purchased a building in January 2015 for Tk. 150,000. The accounting depreciation charge is 5% straight-line. For tax purposes, depreciation of 2% straight-line is deducted annually. The remaining cost will be deducted in future periods, either as depreciation or through a deduction on disposal. The tax rate is 25%. According to IAS12 Income taxes, what should be the deferred tax balance at 31 December 2018?

Reference no: EM132586749

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