INTRODUCTION

You've been asked to prepare model the forecast asset schedules for a new business. As part of the analysis you are required to analyze the impact on the forecast deferred tax. To help you prepare the analysis you have been provided with following information:

FORECAST CAPITAL EXPENDITURE

All capex amounts presented the following table are specified in provided in real 2012 US$m. All Capital expenditure is incurred at the first day of each calendar year.

Capex

2012 10

2013 64

2014 69

2015 99

2016 89

2017 39

2018 34

2019 23

2020 29

2021 69

2022 99

2023 89

2024 39

2025 34

2026 23

2027 29

2028 69

2029 99

FORECAST INFLATION

You have been advised that the inflation rate is forecast to be 3% per annum. ACCOUNTING TREATMENT

For accounting purposes, depreciation on the Capex is calculated on a straight-line basis over 12 years. TAX TREATMENT

For taxation purposes, depreciation on Capex is calculated using the diminishing value method at a rate of 40% per annum. The taxation rate is currently 30% per annum but is forecast to moving down to 28% from the start of 2016.

1.What is the total nominal capex for 2012 through 2021(inclusive)?

a)593.0m

b)598.3m

c)525.0m

d) 583.3m

QUESTION 2

What is the closing balance for the accounting asset schedule in2017?

a)298.3m

b)286.7m

c)370.0m

d) 331.0m

QUESTION 3

What is the closing balance for the taxation asset schedule 2019?

a) 101.6m

b)62.9m

c)91.8m

d) 68.2m

QUESTION 4

What impact does the change in taxation rate have on the opening deferred tax balance for 2016?

a) 2.2m

b) 12.6m

c)7.5m

d)9.7m

QUESTION5

What is the deferred tax balance as at 2028?

a)79.0mAsset

b)79.0mLiability

c)80.2m Asset

d)80.2mLiability