P4. Temporary Differences, Deferred Tax Assets and Liabilities, Realizability of Deferred Assets, Change in Tax Rate....

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P4. Temporary Differences, Deferred Tax Assets and Liabilities, Realizability of Deferred Assets, Change in Tax Rate. The fol

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Answer 1

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a	Year	2018	2019	2020	2021
	Taxable Income ($)	200,000	132,000	110,000	120,000
	Enacted tax rate (%)	40.00%	40.00%	40.00%	40.00%
	Depreciation as per Books ($)	40,000	40,000	40,000	40,000
	Depreciation as per Tax ($)	66,000	90,000	30,000	14,000
	Taxable Income for Rental		120,000	-	-
	Accounting Income for Rental		40,000	40,000	40,000
	Accounting Income ($)	226,000	102,000	140,000	134,000
	Temporary Differences ($)	26,000	(30,000)	30,000	14,000
	Deferred Tax Expense/ (Income) = Temporary Difference * Tax Rate	10,400	(12,000)	12,000	5,600

	Deferred Tax Liability as at end of 2021	10,400

b	Year	2018	2019	2020	2021
	Temporary Differences ($)	26,000	(30,000)	30,000	14,000
	Enacted tax rate (%)	43.00%	43.00%	43.00%	43.00%
	Deferred Tax Expense/ (Income) = Temporary Difference * Tax Rate	11,180	(12,900)	12,900	6,020

	Deferred Tax Liability as at end of 2021	11,180

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