In 20X5, Trelmont deducted in full the cost of equipment of 800,000; a fully informed authority would probably require tax depreciation over 4 years (acceptance not probable, most likely amount used by judgement). Carrying amount of the equipment at the reporting date: 640,000; rate 25%. Compute the resulting increase in current tax and decrease in the deferred tax liability.
- Cost of the equipment
- 800,000
- Tax depreciation period (years)
- 4
- Carrying amount at the reporting date
- 640,000
- Tax rate (%)
- 25 %