REQUIRED: a) Determine the tax base of asset and liabilities for Permai Bhd and calculate the temporary difference as at 31 December 2019. Indicate whether the temporary difference is taxable or deductible. b) Compute the deferred tax expenses for 2019. c) Explain the effect on the computation of deferred tax expense if the tax rate for the assessment year 2019 differs from the tax rate for the assessment year 2018. Calculate the adjusted deferred tax expense of Permai Bhd assuming that the tax rate used in 2018 was 22%.
Permai Bhd is one of the main manufacturers and suppliers of industrial chemical products and equipment that had been incorporated in 2010. The following is the carrying amount of asset and liabilities of the company as at 31 December 2019:
Carrying amount (RM)
|
Property, plant and equipment |
249,200 |
|
Intangible assets |
138,000 |
|
Investment in fixed deposit |
107,000 |
|
|
96,700 |
|
Interest receivable |
10,700 |
|
Inventory |
206,000 |
|
Bank |
129,000 |
|
Trade payables |
197,000 |
|
Accrued interest |
15,600 |
|
Penalties payable |
15,500 |
|
Unearned revenue |
45,300 |
|
10% Loan |
156,000 |
Additional information:
- The cost of the property, plant and equipment is RM356,000 when it was acquired in 2017.
Depreciation expense for property, plant and equipment is calculated at the rate of 10% per year and capital allowance is 20% per year for the first three years from the cost of the assets. - The intangible assets consist of development expenditure of Permai Bhd’s R&D project incurred during the year that was qualified to be capitalised.
- Interest receivable is interest revenue earned from the investment in fixed deposit.
- Meanwhile, interest expense was incurred due to a 10% loan from a financial institution.
- Unearned revenue is payment received under a Permai Bhd’s policy that require new clients to make advance payments before the delivery of goods is made to them.
- The balance of
deferred tax liability on 1 January 2019 was RM8,500. The tax rate for the assessment year 2019 was 24%.
REQUIRED:
a) Determine the tax base of asset and liabilities for Permai Bhd and calculate the temporary difference as at 31 December 2019. Indicate whether the temporary difference is taxable or deductible.
b) Compute the deferred tax expenses for 2019.
c) Explain the effect on the computation of deferred tax expense if the tax rate for the assessment year 2019 differs from the tax rate for the assessment year 2018. Calculate the adjusted deferred tax expense of Permai Bhd assuming that the tax rate used in 2018 was 22%.
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