FAC3701 Assignment 1 Full Solutions Semester 2 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)...........
, a. To calculate the deferred tax balance in the statement of financial position of TopStyle
Ltd for the years ended 30 June 2022 and 30 June 2023, we will follow the statement of
financial position approach as per IAS 12, Income Taxes. This approach requires
recognizing deferred tax assets and liabilities for all temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
Step 1: Identify the temporary differences
1. Administration Building
Carrying amount (1 July 2022): R1,500,000 - (R1,500, years) × 9/12 months =
R1,425,000
Tax base: R1,500,000
Temporary difference: R1,425,000 - R1,500,000 = (R75,000)
Deferred tax (2022): No deferred tax as the SA Revenue Service does not allow a tax
allowance on the building.
For 2023, the carrying amount further reduces by another year's depreciation:
Carrying amount (30 June 2023): R1,500,000 - (R1,500, years) × 21/12
months = R1,350,000
Tax base: R1,500,000
Temporary difference: R1,350,000 - R1,500,000 = (R150,000)
Deferred tax (2023): Still no deferred tax as no tax allowance is provided on the
building.
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