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IAS 12: INCOME TAXES :fire:, In 2018, company ABC had taxable income of…
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In 2018, company ABC had taxable income of $120,000. In 2017, CIT is estimated at $30,000. The CIT rate is 30%.
Determine the CIT payable for 2018 given that the 2017 CIT is fixed to the tax authorities at $35,000.
:question:
:pen:
CIT on profits in 2018 [120,000 x 30%] = 36,000
CIT underpaid in 2017 [35,000 - 30,000] = 5,000
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Custard Co purchased an asset costing $1,500. At the end of 20X8 the carrying amount is $1,000. The cumulative depreciation for tax purposes is $900 and the current tax rate is 25%. :question:
:pen:
Under the accounting basis: The carrying amount of the asset is $1,000
Tax base: Net worth of the property is: $1,500 - $900 = $600
The resulting temporary difference is 1,000 - 600 = $400
Thus, taxable income < pre-tax accounting profit, giving rise to deferred CIT payable.
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