Question

For the year ending 31st December	20X3	20X4	20X5
Accounting profit (PBT)	80,000	130,000	100,000
Depreciation	7,000	12,000	14,000
Depreciation loss (taxation)	8,000	14,000	15,000
Corporation Tax Rate	30%	30%	30%
Tax Paid pertaining to previous year	Nil	28,000	45,000
Transfer to/(from) deferred tax	8,000	6,000	(6,000)
	credit	credit	debit
*assume the amount of "tansfer to/(from) deferred tax is calculated correctly after taking
into account all the necessary adjustments.
Required:
Show the Provision for taxation account, Deferred Tax account, extract of the income statement and
extract of the statement of financial positionfor the three years ending 31 December 20X3, 20X4 and
20X5.

Answer 1

Calculation of Tax
	2,013	2,014	2,015
Accounting Profit	80,000	1,30,000	1,00,000
Add: Dep	7,000	12,000	14,000
Less: Dep (Tax)	8,000	14,000	15,000
Taxable Profit	79,000	1,28,000	99,000
Corp Tax Rate	30%	30%	30%
Tax	23,700	38,400	29,700
Provision for Tax
	2013	By Income Tax	23,700
To balance C/F	23700
	23700		23700
To Cash	28000	By Balance B/F	23700
		By Income Tax	38,400
To balance C/F	34,100
	62,100		62,100
To Cash	45000	By Balance B/F	34,100
		By Income Tax	29,700
To balance C/F	18,800
	63,800		63,800

Deffered Tax
		By Income Tax	8000
To balance C/F	8000
	8000		8000
		By Balance B/F	8000
		By Income Tax	6000
To balance C/F	14000
	14000		14000
		By Balance B/F	14000
To Income Tax	6000
To balance C/F	8000
	14000		14000
Income Statement        2,013         2,014         2,015 Accounting Profit     80,000 1,30,000 1,00,000 Less-Income Tax     23,700      38,400      29,700 Deffered Tax        8,000         6,000       -6,000 Profit After Tax 48,300    85,600    76,300 Balance Sheet - 2013 Liability Amt Asset Amt Profit      48,300 Privison For Tax 23700 Deffered Tax 8000 Balance Sheet - 2014 Liability Amt Asset Amt Profit 1,33,900 Privison For Tax 34100 Deffered Tax 16000 Balance Sheet - 2015 Liability Amt Asset Amt Profit 2,10,200 Privison For Tax 18800 Deffered Tax 8000