Use the following format to answer Question 1:

QUESTION 1

QUESTION 1 1. Read and understand chapter 1 on Deferred tax. 2. For 1.1, use the balance sheet approach to calculate the deferred tax balance. Please use the following format: Carrying Tax base Temporary diff Deferred tax DTA/DTL amount 3. For 1.2, use the income statement approach to calculate the current tax balance. Please use the following format: XXX Profit before tax Adjust for permanent differences Less dividend income (xxx) XXX Taxable accounting profits Adjust for movement in temporary differences Add depreciation XXX Less wear and tear (xox) Add income received in advance closing balance Less income received in advance opening balance Less expenses prepaid closing balance (xxx) Taxable profit QUESTION ONE Tex Limited bought a manufacturing plant for R500 000 on 1 January 2016 and put it into production immediately. The plant had a useful life of 5 years, a residual value of nil and is depreciated using the straight-line basis. The profit before taxation in 2019 was R150 000 (2018: R120 000). The tax authorities allow wear and tear on the following basis: 1. 50% of the cost in the first year 2. 30% of the cost in the second year 3. 20% of the cost in the third year The tax rate remained constant at 4096 from 2016 to 2019. The company's financial year ends on 31 December. . There are no other differences between accounting profit and taxable profit other than those evident from the information given. The plant was sold for R100 000 on 31 December 2019. Required a) Calculate deferred tax using the balance sheet approach for 2016 to 2019. b) Calculate the taxable profit and current income tax expense for 2018 and 2019