Question 3. The following information is given in respect of Transport plc: a) Non-current assets consist entirely of plant and machinery. The net book value is £1,100,000 and the tax written down value after capital allowances (tax base) is £1,000,000. b) The provision for deferred taxes (all of which relates to fixed assets timing differences) on 30/06/2010 was £21,000. c) The company's capital expenditure forecasts indicate that capital allowances and depreciation in future years will be: Year ended 30th June (£) 2011 2012 2013 2014 Depreciation charge for year (£) 12,000 14,000 20,000 40,000 44,000 46,000 Capital Allowances for year (£) 53,000 49,000 36,000 32,000 32,000 36,000 2015 2016

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Question 3. The following information is given in respect of Transport ple:
a) Non-current assets consist entirely of plant and machinery. The net book value is £1,100,000
and the tax written down value after capital allowances (tax base) is £1,000,000.
b) The provision for deferred taxes (all of which relates to fixed assets timing differences) on
30/06/2010 was £21,000.
c) The company's capital expenditure forecasts indicate that capital allowances and depreciation
in future years will be:
Year ended 30th June
(£)
2011
Depreciation charge for year
(£)
12,000
14,000
20,000
40,000
44,000
46,000
Capital Allowances for year
(£)
53,000
49,000
36,000
32,000
32,000
36,000
2012
2013
2014
2015
2016
For the following years, capital allowances are likely to continue to be in excess of depreciation for
the foresecable future.
d) Corporation tax is to be taken at 21%.
Required: Calculate the deferred tax charges or credits for the next six years, commencing with year
ended 30/06/2011, in accordance with the provisions of IAS 12.
Transcribed Image Text:Question 3. The following information is given in respect of Transport ple: a) Non-current assets consist entirely of plant and machinery. The net book value is £1,100,000 and the tax written down value after capital allowances (tax base) is £1,000,000. b) The provision for deferred taxes (all of which relates to fixed assets timing differences) on 30/06/2010 was £21,000. c) The company's capital expenditure forecasts indicate that capital allowances and depreciation in future years will be: Year ended 30th June (£) 2011 Depreciation charge for year (£) 12,000 14,000 20,000 40,000 44,000 46,000 Capital Allowances for year (£) 53,000 49,000 36,000 32,000 32,000 36,000 2012 2013 2014 2015 2016 For the following years, capital allowances are likely to continue to be in excess of depreciation for the foresecable future. d) Corporation tax is to be taken at 21%. Required: Calculate the deferred tax charges or credits for the next six years, commencing with year ended 30/06/2011, in accordance with the provisions of IAS 12.
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