- 20 Marks
Title: FR – L2 – Q48 – Taxation
Calculate Peak Ltd's corporate income tax liability for 20X4 based on profit, depreciation, and tax allowances.
Question
Peak Ltd was incorporated on 1 January 20X4. In the year ended 31 December 20X4 the company made a profit before taxation of GH¢121,000.
During the period Peak Ltd made the following capital additions:
| GH¢ | |
|---|---|
| Plant | 48,000 |
| Motor vehicles | 12,000 |
During the period:
| GH¢ | |
|---|---|
| Accounting depreciation | 11,000 |
| Tax depreciation | 15,000 |
Tax is chargeable at a rate of 30%.
Required:
(a) Calculate the corporate income tax liability for the year ended 31st December 20X4.
(b) Calculate the deferred tax balance that is required in the statement of financial position as at 31st December 20X4.
(c) Prepare a note showing the movement on the deferred tax account and thus calculate the deferred tax charge for the year ended 31st December 20X4.
(d) Prepare the statement of profit or loss note which shows the compilation of the tax expense for the year ended 31st December 20X4.
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