Question

Apple Ltd purchased a depreciable asset for $360,000 on 1 July 2004. For accounting purposes, it is estimated to have a useful life of 12 years with no residual value. For taxation purposes, the useful life is 10 years with no residual value. The asset is depreciated on the straight-line basis for both accounting and tax purposes. The tax rate is 30%.

What is the adjustment required in the deferred tax liability account for the year ended 30 June 2014 and 30 June 2015 respectively?

a) $6,000; ($30,000)
b) $1,800; ($9,000)
c) $1,800; $9,000
d) $60,000; $30,000
e) $18,000; $9,000

and why?

Answer 1

		As per	As per	Timing
		Books	Tax	Difference
				(DTL)
		($)	($)	($)
01/07/2004	Original cost	360000	360000
	Life	12	10
	Depreciation	30000	36000	6000
	Tax @ 30%	9000	10800	1800
	End of life of asset	30/06/2016	30/06/2014
	WDV on 30-6-2014	60000	NIL
	WDV on 30-6-2015	30000	N/A
				($)
	The DTL balance on 30th June 2014 will be :			18000
	(1800 for 10 years)
	The DTL balance on 30th June 2015 will be :			9000
	(the balance of $18,000 will be adjusted
	towards the tax of 2015 , i.e., 9,000)
	(18000-9000)
	Hence, select the answe (e) : $18,000; $9,000