Assume that for a particular company the only temporary difference for tax effect accounting purposes relates to the depreciation of a newly acquired machine. The machine is acquired on 1 July 2015 at a cost of $212,000. Its useful life is considered to be 7 years, after which time it: is expected to have no residual value. For tax purposes it can be fully written off over 5 years. The tax rate is gssumed to be 30 per cent.

Assume that for a particular company the only temporary difference for tax effect accounting purposes relates to the depreciation of a newly acquired machine. The machine is acquired on 1 July 2015 at a cost of $212,000. Its useful life is considered to be 7 years, after which time it: is expected to have no residual value. For tax purposes it can be fully written off over 5 years. The tax rate is gssumed to be 30 per cent.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Assume that for a particular company the only temporary difference for tax effect accounting
purposes relates to the depreciation of a newly acquired machine. The machine is acquired
on 1 July 2015 at a cost of $212,000. Its useful life is considered to be 7 years, after which time it
is expected to have no residual value. For tax purposes it can be fully written off over 5 years.
The tax rate is assumed to be 30 per cent.
What would be the balance of the deferred tax asset or deferred tax liability as at 30 June
2018. Type in the answer below the correct amount.
Answer:

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