The following figures appeared in W Ltd's balance sheet at 31 March 19X2:

During the year ended 31 March 19 X3 , W Ltd made a payment of \(£ 520,000\) to the Collector of Taxes in settlement of the company's corporation tax for the year ended 31 March 19X2. Dividend payments totalling \(£ 60,000\) were made during the year ended 31 March 19X2 and a further dividend of \(£ 200,000\) had been proposed at the year end.
Two dividend payments were made during the year ended 31 March 19X3. A payment of \(£ 200,000\) was made in respect of the final dividend for the year ended 31 March 19X2. An interim dividend of \(£ 40,000\) was paid in respect of the year ended 31 March 19 X3. These payments were made in May 19X2 and September 19X2 respectively. The directors have provided a final dividend of \(£ 240,000\) for the year ended 31 March 19 X3.
W Ltd received a dividend of \(£ 12,000\) from a UK quoted company. This was received in August \(19 \times 2\).
W Ltd's tax advisers believe that corporation tax of \(£ 740,000\) will be charged on the company's profits for the year ended 31 March 19X3. This amount is net of the tax relief of \(£ 104,000\) which should be granted in respect of the exceptional loss which the company incurred during the year. It has been assumed that corporation tax will be charged at a rate of \(35 \%\). The basic rate of income tax was \(25 \%\).
It has been decided that the provision for deferred tax should be increased by \(£ 20,000\). No provision is to be made in respect of timing differences of \(£ 400,000\).
You are required

(a) to prepare the note which will support the figure for the provision for corporation tax in W Ltd's published profit and loss account for the year ended 31 March \(19 \times 3\);

(b) to calculate the liability for corporation tax which will appear in W Ltd's published balance sheet at 31 March 19 X3;

(c) to prepare the deferred tax note which will support the figure for the liability which will appear in W Ltd's published balance sheet at 31 March 19X3.

Transcribed Image Text:

Current liability - corporation tax 600,000 Deferred taxation 300,000