AC2101 S1 2014 Seminar 13 & 14 Deferred Tax (Anil).pptx

what gives rise to a td in the case of entity aa ltd

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Unformatted text preview: earlier seminar? 5 Recall: CASE OF ENTITY - AA Ltd *  First year of operation begins on 1.1.20X1 *  Bought a machine that same day and the cost of machine: $100K *  Accounting: Straight- line depreciation over 4 yrs *  Tax: Capital allowance ~ $40K, $30K, $25K, $5K *  Sales revenue in 20X1, 20X2, 20X3 and 20X4: $200K per year *  Tax rate: 40% *  Assuming no other expenses, accounting profit before taxation for 20X1, 20X2, 20X3 and 20X4: $175k per year 6 3 Permanent and Temporary Differences *  What about temporary differences (“TD”)? *  What gives rise to a TD in the case of entity AA Ltd in the earlier seminar? *  Difference between the accounting treatment of depreciation and tax treatment of capital allowance of the machine *  In this case, both treatments differ...
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This document was uploaded on 02/10/2014.

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