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Taxable Profit will be ($500 – Depreciation as per tax ($1000*20% = $200)) i.e. $300
Current Tax will be payable on $300 *Tax Rate.
Deferred Tax will arise on temporary difference, i.e., the difference between depreciation as per
accounting and depreciation as per tax. In the above example, the deferred tax will arise at
$100.
Financial statements - Income statement and statement of financial position
Income Statement - The income statement primarily focuses on a company’s revenues and
expenses during a particular period. Once expenses are subtracted from revenues, the
statement produces a company's profit figure called net income.
The statement of financial position - provides an overview of assets, liabilities, and
stockholders' equity as a snapshot in time.
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