Deferred tax measurement and allocation: Rate change and dividend

Context

The Valdrise group (fictitious entities) manufactures industrial valves and pumps. Valdrise SA, the parent, is based in Lustrania; its subsidiaries are Corvanne SA in Cadoria (loss-making), Arlesque SA in Merovia (acquired on 1 July 20X7) and Valdrise Vescaria in Vescaria (a low-tax country); the four countries are fictitious. You are the preparer of the consolidated tax closing file at 31 December 20X7; the head of consolidation is the reviewer. The financial statements will be authorised on 4 March 20X8. The current tax of Arlesque and Valdrise Vescaria and the deferred tax movements prior to the closing have been recorded; the closing adjustments remain to be made. The tax rules, rates and amounts calculated by the advisers are case data.

Assignment

Measurement and allocation (rate change, dividend, land).

Purpose of the workpaper

Measure deferred tax at the rate expected on reversal and according to the expected manner of recovery, measure the effect of a change in tax rate and allocate it to profit or loss or to other comprehensive income according to the origin of the differences, recognise the deferred tax on a revaluation, the tax consequences of dividends and the effect of a change in tax status, then reconcile the deferred tax expense in profit or loss with the change in balances.

Questions of the file covered by this workpaper

• Calculate the effects of the rate change and the deferred tax on the revalued land.
• Deal with the dividend declared by Valdrise SA.
• Record the closing entries.

• MemoScoping memoOpen
• ScheduleValdrise SA tax return workingsOpen
• MemoCorvanne tax memoOpen
• ScheduleSchedule of fixed assets and provisionsOpen
• ContractWarehouse leaseOpen
• DocumentValuation report on the landOpen
• MinutesMinutes of the general meetingOpen
• ContractCorvanne supply contractOpen
• ContractArlesque acquisition fileOpen
• MinutesMinutes of the board on investmentsOpen
• ContractShare option planOpen
• MemoAdvisers' memo on uncertain treatmentsOpen
• MemoPillar Two memoOpen
• ScheduleConsolidation scheduleOpen
• MemoMemo from the chief financial officerOpen
• ExtractExtract from the social reportOpen
• InvoiceInsurance invoiceOpen