Questions:
How is deferred tax is calculated for long-term assets?

My company has purchased a manufacturing plant for $100,000. For the company's accounting purposes, the useful life of this asset is five years; however, the tax authority requires depreciation over four years. The current tax in our jurisdiction is 25%. How can I calculate the deferred tax for this?

Reference answers:
Deferred tax is the income tax payable in future periods with respect to taxable temporary differences. To calculate the deferred tax for your plant, you need to determine the temporary difference between the depreciation expense for tax purposes and accounting purposes. Temporary differences are defined as differences between the carrying amount of an asset or liability in the statement of financial position and its tax base (i.e. the amount attributed to that asset or liability for tax purposes. If the accounting 

Temporary difference         =         Carrying amount         -         Tax base
Deferred tax asset or liability         =         Temporary difference         x         Tax rate
Deferred tax liability (for asset)= carrying amount of asset > tax base
Deferred tax asset (for asset) = carrying amount of asset < tax base

1. For tax purposes, the depreciation expense is calculated over four years, resulting in $25,000 of depreciation per year ($100,000 / 4 years). This will leave a tax base amount of $75,000 (100,000 - 25,000).
2. For accounting purposes, the equipment has depreciated over five years, resulting in $20,000 in depreciation expenses per year ($100,000 / 5 years). This will leave a carrying amount of 80,000 (100,000 - 20,000)
3. The temporary difference is $5,000 ($80,000 - $75,000). 
4. Then, we multiply the temporary difference $5,000 by the applicable tax rate 25%. 
5. This gives us a deferred tax liability of $1,250.