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Intermediate Accounting - Deferred Tax The following are six independent situations occurring in the financial year ended 31 December 2018. Madagascar Bhd. provides for repair
Intermediate Accounting - Deferred Tax
The following are six independent situations occurring in the financial year ended 31 December 2018.
- Madagascar Bhd. provides for repair expenses of RM200,000 in computing accounting profit for the year. These costs will only be paid in the year 2019.
- A political donation is made by Berjasa Bhd. at the amount of RM40,000. Political donations are not allowed for tax purposes.
- The trade and payables account of Sejiwa Bhd. includes an accrual for compensation to be paid to employees amounting to RM1 million. The amount is allowed for taxation when paid.
- Neverland Bh recognizes development costs of RM50,000 as the research project has met the capitalization criteria. Amortization is made for the asset at the rate of 20% per annum. These development costs are allowed for taxation purposes at the time they are incurred.
- Harvey Normie Bhd. has a machinery with a total cost to date amounting to RM1.2 million, accumulated depreciation being RM600,000. Capital allowances claimed to date amounting to RM500,000.
- During the year, Batista Bhd. recognizes interest receivables amounting to RM12,000 from the companys investment in government bonds. The interest from the tax-exempt government bond will be received in 2019.
Required : For each situation, identify taxable or deductible temporary differences for the year ended 31 December 2018. Justify your answers.
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