Question 2b

On 1 April 2021, Alpha Bhd purchased 100% of the ordinary shares of Beta Sdn Bhd. The fair values of the assets and liabilities acquired were considered to be equal to their carrying amounts, with the exception of equipment, which had a fair value of RM54 million.

The tax base of the equipment on 1 April 2021 was RM50 million. The tax rate is 25%, and the fair value adjustment does not affect the tax base of the equipment.

Required:

Discuss on how the above will affect the accounting for deferred tax under IAS 12 Income Taxes in the group financial statements of Alpha Bhd.