10. Haulier plc is preparing its accounts for the year ended 31 March 20x2. The excess of capital allowances over depreciation for the year was 1,000,000. This was the only temporary difference. The deferred taxation account at 1 April 20X1 had a balance of 400,000. The corporation tax liability for the year ended 31 March 20X1 had been estimated at 462,000. However, 454,000 was agreed and paid during the year ended 31 March 20x2. The taxable income for the year to 31 March 20X2 is estimated to be 2,525,000. Corporation tax is charged at 20% What will be the figure shown as the tax expense in the income statement for the year ended 31 March 20X2 and the closing balance of the deferred tax account on the balance sheet on that date? Tax Expense Deferred Tax Answer: Development completed 31 October 20x6. Total expenditure 240,000. Being amortised over 5 years on a straight-line basis. The balance at 31 October 20x7 was 192,000. Project B: Development commenced 1 November 20x6. Expenditure to date: Year ended 31 October 20x7 50,000 Year ended 31 October 20x8 95,000 All expenditure on this project continues to meet the criteria for capitalisation under IAS 38. Project C: A research project to investigate the possibility of using a new material for battery production. Started May 20x8 and total expenditure so far is 50,000. Requirements: See next page Required Calculate the amounts to be included in the Income Statement and Balance Sheet in respect of each of the three projects above for the year ended 31 October 20x8. You should assume that Theon capitalises development expenditure under IAS 38. 10 marks Total 18 marks b) Answer: Income Statement for the year ended 31 October 20x8 000 Balance Sheet as at 31 October 20x8 10. Haulier plc is preparing its accounts for the year ended 31 March 20x2. The excess of capital allowances over depreciation for the year was 1,000,000. This was the only temporary difference. The deferred taxation account at 1 April 20X1 had a balance of 400,000. The corporation tax liability for the year ended 31 March 20X1 had been estimated at 462,000. However, 454,000 was agreed and paid during the year ended 31 March 20x2. The taxable income for the year to 31 March 20X2 is estimated to be 2,525,000. Corporation tax is charged at 20% What will be the figure shown as the tax expense in the income statement for the year ended 31 March 20X2 and the closing balance of the deferred tax account on the balance sheet on that date? Tax Expense Deferred Tax Answer: Development completed 31 October 20x6. Total expenditure 240,000. Being amortised over 5 years on a straight-line basis. The balance at 31 October 20x7 was 192,000. Project B: Development commenced 1 November 20x6. Expenditure to date: Year ended 31 October 20x7 50,000 Year ended 31 October 20x8 95,000 All expenditure on this project continues to meet the criteria for capitalisation under IAS 38. Project C: A research project to investigate the possibility of using a new material for battery production. Started May 20x8 and total expenditure so far is 50,000. Requirements: See next page Required Calculate the amounts to be included in the Income Statement and Balance Sheet in respect of each of the three projects above for the year ended 31 October 20x8. You should assume that Theon capitalises development expenditure under IAS 38. 10 marks Total 18 marks b) Answer: Income Statement for the year ended 31 October 20x8 000 Balance Sheet as at 31 October 20x8