For 20X5, Ferrolde has taxable profit of 900,000, taxed at 25%. A taxable temporary difference of 150,000 arose in 20X5 (accelerated tax depreciation) and will reverse in 20X6, for which a law enacted in 20X5 sets the rate at 23%. No tax has been paid. Record the current and deferred tax entries at 31 December 20X5.
- 20X5 taxable profit
- 900,000
- 20X5 rate (%)
- 25 %
- Taxable difference arising in 20X5
- 150,000
- Rate enacted for 20X6 (%)
- 23 %