The following information is available for Pronghorn plc for 2022. 1. Excess of tax depreciation over book depreciation, £38,400. This £38,400 difference will reverse equally over the years 2023-2026. Deferral, for book purposes, of £20,800 of rent received in advance. The rent will be recorded as revenue in 2023. Pretax financial income, £284,000. There are no deferred taxes at the beginning of 2022. Tax rate for all years, 40%. 2. 3. 4. (a) Your Answer Correct Answer (Used) Compute taxable income for 2022. Taxable income £ 266,400

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.