Morvanne brings a telecommunications mast into use; it recognises a dismantling provision of 140,000 and includes the same amount in the cost of the mast (treatment used in the case). The tax law (data) deducts dismantling costs only when paid and ignores this component of cost. Future taxable profit is probable. Tax rate: 20%. Record the deferred tax entry at the outset.
- Dismantling provision (and component of the asset's cost)
- 140,000
- Tax rate (%)
- 20 %