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Deferred tax
Example 9.2
Shazam acquired an item of plant and machinery during the current year at a
cost of $100k. Shazam depreciates its plant and machinery over an economic
lifetime of 10 years on the straight line basis.
Capital allowances are charged on plant and machinery within Shazam’s tax
jurisdiction at 25% reducing balance.
The tax rate for Shazam is 30%.
Required:
Determine the journal entries posted in year 1 and year 2 relating to
deferred tax on the plant and machinery of Shazam.
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