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Case 4 (25 marks) The following information relate to the accounting records of Triple Berhad for the financial year ended 31 December 2017: Accounts Leasehold land Product development expenditure Financial assets Warranty payable Rental payable Carrying Amount (RM,000) 8,600 3,400 2,000 4,000 240 110 (iii) Additional information: (i) The amount deductible for tax purposes in the future periods relating to the property, plant and equipment is RM2.4 million. (ii) Leasehold land is a non-qualifying asset. During the year, the company does not charge any amortisation for the product development expenditure. Deduction for tax purposes is allowed upon amortisation. (iv) No claims are yet to be received relating to the warranty payable during 2017. Rental is deductible for tax purposes only upon the payment of rental. No payment has been made during the year. (vi) There is no deferred tax brought forward from the previous year and taxable income for the year is RM4.775 million. (vii) The current year tax rate is 24%. Required: (a) Prepare a table showing the tax base and temporary differences for the items above as at 31 December 2017. (5 Marks) Determine the amount of tax expense as charged in the statement of profit or loss and other comprehensive income and the deferred tax liability in the statement of financial position as at 31 December 2017. (7 Marks) Prepare the journal entry record income tax expense, deferred income tax and income tax payable for 2017. (5 Marks) Explain how users are benefited from accounting for deferred tax in company's financial statements. (8 Marks) Case 4 (25 marks) The following information relate to the accounting records of Triple Berhad for the financial year ended 31 December 2017: Accounts Leasehold land Product development expenditure Financial assets Warranty payable Rental payable Carrying Amount (RM,000) 8,600 3,400 2,000 4,000 240 110 (iii) Additional information: (i) The amount deductible for tax purposes in the future periods relating to the property, plant and equipment is RM2.4 million. (ii) Leasehold land is a non-qualifying asset. During the year, the company does not charge any amortisation for the product development expenditure. Deduction for tax purposes is allowed upon amortisation. (iv) No claims are yet to be received relating to the warranty payable during 2017. Rental is deductible for tax purposes only upon the payment of rental. No payment has been made during the year. (vi) There is no deferred tax brought forward from the previous year and taxable income for the year is RM4.775 million. (vii) The current year tax rate is 24%. Required: (a) Prepare a table showing the tax base and temporary differences for the items above as at 31 December 2017. (5 Marks) Determine the amount of tax expense as charged in the statement of profit or loss and other comprehensive income and the deferred tax liability in the statement of financial position as at 31 December 2017. (7 Marks) Prepare the journal entry record income tax expense, deferred income tax and income tax payable for 2017. (5 Marks) Explain how users are benefited from accounting for deferred tax in company's financial statements. (8 Marks)
