The information that follows relates to equipment owned by Waterway Limited at December 31, 2020: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) $7,020,000 780,000 5,460,000 4,953,000 4,836,000 39,000

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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.