The accounting profit before tax of Cherry Ltd for the year ended 31 December 2012 amounted to $5,000 after including the following information: Accrued interest payable: Opening balance as at 1 January 2012 was $5,000; interest paid during the financial year amounted to $2,000; and ending balance as at 31 December 2012 was $4,000. Income tax rate was 30 per cent. There is no other difference between accounting profit and taxable income except the above information. Which journal entry should be recorded for the change in deferred tax assets or deferred tax liabilities in relation to the movement of accrued interest payable for the financial year ended 31 December 2012.
The accounting profit before tax of Cherry Ltd for the year ended 31 December 2012 amounted to $5,000 after including the following information: Accrued interest payable: Opening balance as at 1 January 2012 was $5,000; interest paid during the financial year amounted to $2,000; and ending balance as at 31 December 2012 was $4,000. Income tax rate was 30 per cent. There is no other difference between accounting profit and taxable income except the above information. Which journal entry should be recorded for the change in deferred tax assets or deferred tax liabilities in relation to the movement of accrued interest payable for the financial year ended 31 December 2012.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The accounting profit before tax of Cherry Ltd for the year ended 31 December 2012 amounted to $5,000 after including the following information:
Accrued interest payable: Opening balance as at 1 January 2012 was $5,000; interest paid during the financial year amounted to $2,000; and ending balance as at 31 December 2012 was $4,000. Income tax rate was 30 per cent.
There is no other difference between accounting profit and taxable income except the above information.
Which journal entry should be recorded for the change in deferred tax assets or deferred tax liabilities in relation to the movement of accrued interest payable for the financial year ended 31 December 2012.
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