Tax Expense – Knowsia

FR – L2 – Q51 – Corporate Reporting and Compliance

Calculate Sharp Ltd's corporate income tax liability for 20X6 at a 34% tax rate.

Question

SHARP LTD (IV)
Using the information provided in “Sharp Ltd III” and assume that Sharp Ltd is subject to a higher tax rate of 34% in 20X6.

Required
(a) Calculate the corporate income tax liability for the year ended 31st December 20X6.

(b) Calculate the deferred tax balance that is required in the statement of financial position as at 31st December 20X6.

(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 20X6.

(d) Prepare the statement of profit or loss note which shows the compilation of the tax expense for the year ended 31st December 20X6.

(e) Prepare a note to reconcile the product of the accounting profit and the tax rate to the tax expense for year ended 31st December 20X6.

Answer

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Tags: Compliance, Financial Reporting, profit, Tax Expense, Tax Reconciliation
Level: Level 2

Topic: Corporate Reporting and Compliance

FR – L2 – Q50 – Corporate Reporting and Compliance

Calculate Sheen Ltd's corporate income tax liability for the year ended 31 December 20X6.

Question

Continuing from the previous year. The following information is relevant for the year ended 31st December 20X6.
(a) Interest payable/Interest receivable
Sheen Ltd still has GH₵25,000 of 8% convertible loan stock in issue and still retains its holding in the debentures purchased in 20X5.
(b) Provision for warranty
During the year Sheen Ltd had paid out GH₵500 in warranty claims and provided for a further GH₵2,000.
(d) Development costs
During 20X6 Sheen Ltd has capitalised development expenditure of GH₵17,800 in accordance with the provisions of IAS 38. Assume that tax relief on this expenditure is taken in full in the period in which it is incurred.
(e) Further information
Profit before taxation
Depreciation charged
Tax allowable depreciation
175,000
18,500
24,700
(f) Entertainment
Sheen Ltd paid for a large office party during 20X6 to celebrate a successful first two years of the business. This cost GH₵20,000. Assume that this expenditure is not tax deductible.
Tax is chargeable at a rate of 30%.

Required
(a) Calculate the corporate income tax liability for the year ended 31st December 20X6.

(b) Calculate the deferred tax balance that is required in the statement of financial position as at 31st December 20X6.

(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 20X6.

(d) Prepare the statement of profit or loss note which shows the compilation of the tax expense for the year ended 31st December 20X6.

(e) Prepare a note to reconcile the product of the accounting profit and the tax rate to the tax expense for year ended 31st December 20X6.

Answer

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Tags: Financial Reporting, IAS 12, Tax Expense, Tax Reconciliation
Level: Level 2

Topic: Corporate Reporting and Compliance

FR – L2 – Q49 – Financial Reporting Standards and Their Applications

Calculate Shey Ltd's corporate income tax liability for 20X5, considering adjustments for interest, provisions, and fines.

Question

Continuing from the previous year. The following information is relevant for the year ended 31st December 20X5.

(a) Capital transactions

	GHe
Depreciation charged	14,000
Tax allowances	16,000

(b) Interest payable
On 1st April 20X5 the company issued GH₵25,000 of 8% convertible loan stock. Interest is paid in arrears on 30th September and 30th March. Assume that tax relief on interest expense is only given when the interest is paid.

(c) Interest receivable
On 1st April Shey Ltd purchased debentures having a nominal value of GH₵4,000. Interest at 15% pa is receivable on 30th September and 30th March. Assume that interest income is not taxed until the cash is actually received.

(d) Provision for warranty
In preparing the financial statements for the year to 31st December 20X5, Shey Ltd has recognised a provision for warranty payments in the amount of GH₵1,200. This has been correctly recognised in accordance with IAS 37 and the amount has been expensed. Assume that tax relief on the warranty cost is only given when the expense is paid.

(e) Fine
During the period Shey Ltd has paid a fine of GH₵6,000. The fine is not tax deductible.

(f) Further information
The accounting profit before tax for the year was GH₵125,000.

Tax is chargeable at a rate of 30%.

Required
(a) Calculate the corporate income tax liability for the year ended 31st December 20X5.

(b) Calculate the deferred tax balance that is required in the statement of financial position as at 31st December 20X5.

(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 20X5.

(d) Prepare the statement of profit or loss note which shows the compilation of the tax expense for the year ended 31st December 20X5.

(e) Prepare a note to reconcile the product of the accounting profit and the tax rate to the tax expense for year ended 31st December 20X5.

Answer

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Tags: Accounting Profit, Financial Statements, Tax Expense, Tax Reconciliation
Level: Level 2

Topic: Financial Reporting Standards and Their Applications

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.

Answer

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Tags: axation, Current Tax, Deferred Tax, Profit or Loss, Tax Expense
Level: Level 2

Topic: Financial Reporting Standards and Their Applications

Tag (SQ): Tax Expense

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FR – L2 – Q51 – Corporate Reporting and Compliance

Calculate Sharp Ltd's corporate income tax liability for 20X6 at a 34% tax rate.

FR – L2 – Q50 – Corporate Reporting and Compliance

Calculate Sheen Ltd's corporate income tax liability for the year ended 31 December 20X6.

FR – L2 – Q49 – Financial Reporting Standards and Their Applications

Calculate Shey Ltd's corporate income tax liability for 20X5, considering adjustments for interest, provisions, and fines.

Title: FR – L2 – Q48 – Taxation

Calculate Peak Ltd's corporate income tax liability for 20X4 based on profit, depreciation, and tax allowances.

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FR – L2 – Q51 – Corporate Reporting and Compliance

Calculate Sharp Ltd's corporate income tax liability for 20X6 at a 34% tax rate.

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FR – L2 – Q50 – Corporate Reporting and Compliance

Calculate Sheen Ltd's corporate income tax liability for the year ended 31 December 20X6.

You're reporting an error for "FR – L2 – Q50 – Corporate Reporting and Compliance"

FR – L2 – Q49 – Financial Reporting Standards and Their Applications

Calculate Shey Ltd's corporate income tax liability for 20X5, considering adjustments for interest, provisions, and fines.

You're reporting an error for "FR – L2 – Q49 – Financial Reporting Standards and Their Applications"

Title: FR – L2 – Q48 – Taxation

Calculate Peak Ltd's corporate income tax liability for 20X4 based on profit, depreciation, and tax allowances.

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