Question 2 A plant was purchased on 01 January 2020 for R600 000 and sold on 01 January 2021 for R510 000.The depreciation rate used by the accountant is 50% per annum on straight line basis. The rate of wear and tear allowed as a tax deduction is 33,3% per annum on straight line basis.

The profit before tax is R200 000 in 2020 and 2021,according to both the accountant and tax authority, before considering the asset in any way.

Additional information:

Assume that there is no other information relating to any of the affected accounts.

The income tax rate is 28% and there are no components of other comprehensive income.

Required:

2.1 Calculate the deferred income tax using balance sheet approach. (8 marks)

Briefly discuss the differences between the two methods which are used to calculate the deferred tax.