The finance director of Hyden Ltd is unsure about the deferred tax implications for two of the items in the companys statement of financial position.

Item 1:	Hyden Ltd has a balance of $100,000 in its prepaid insurance account. The insurance is deductible when the payment to the insurance is made.
Item 2:	Hyden Ltd purchased an item of property, plant and equipment (PPE) 5 years ago for $1,000,000. The depreciation expense for accounting purpose is $50,000 per annum, resulting an accumulated depreciation of $250,000 for the year. The taxation office allows this type of PPE to be depreciated at $25,000 per annum.

Required:

1. Calculate the deferred tax implication (deferred tax asset or deferred tax liability) for each of the above items, in accordance with IAS 12 / AASB 112 Income Taxes. Assume a tax rate of 30%.

(4 marks)

ANSWER HERE:

	Carrying Amount	Tax Base	Taxable Temp Diffs	Deductible Temp Diffs
Prepaid insurance
PPE