Esparvel holds 25% of an associate: carrying amount of the investment 1,500,000, tax base 1,100,000. On the facts of the case, Esparvel cannot control the associate's distribution policy; it expects to recover the gap as dividends, taxed at 10% (data). Compute the difference and the deferred tax liability.
- Carrying amount of the investment in the associate
- 1,500,000
- Tax base of the investment
- 1,100,000
- Expected tax on dividends (%)
- 10 %