Document ID: chunk:federal_register_of_legislation:F2023C00930:reg:5:p42
Version: federal_register_of_legislation:F2023C00930
Segment Type: reg
Provision Reference: reg 5 (pt 42/61)
Character Range: 132667–138707

an asset is acquired.
At 1/1/X6, the building was revalued to 65,000 and the entity estimated that the remaining useful life of the building was 20 years from the date of the revaluation. The revaluation did not affect taxable profit in X6 and the taxation authorities did not adjust the tax base of the building to reflect the revaluation. In X6, the entity transferred 1,033 from revaluation surplus to retained earnings. This represents the difference of 1,590 between the actual depreciation on the building (3,250) and equivalent depreciation based on the cost of the building (1,660, which is the book value at 1/1/X6 of 33,200 divided by the remaining useful life of 20 years), less the related deferred tax of 557 (see paragraph 64 of the Standard).

Current tax expense
                                      X5          X6

Accounting profit                     8,775       8,740
Add
Depreciation for accounting purposes  4,800       8,250
Charitable donations                  500         350
Fine for environmental pollution      700         –
Product development costs             250         250
Healthcare benefits                   2,000       1,000
                                      17,025      18,590
Deduct
Depreciation for tax purposes         (8,100)     (11,850)
Taxable profit                        8,925       6,740

Current tax expense at 40%            3,570
Current tax expense at 35%                        2,359

Carrying amounts of property, plant and equipment
                                                                  Building  Motor vehicles  Total

Balance at 31/12/X4                                               50,000                    10,000     60,000
Additions X5                                                      6,000                     –          6,000
Balance at 31/12/X5                                               56,000                    10,000     66,000
Elimination of accumulated depreciation on revaluation at 1/1/X6  (22,800)                  –          (22,800)
Revaluation at 1/1/X6                                             31,800                    –          31,800
Balance at 1/1/X6                                                 65,000                    10,000     75,000
Additions X6                                                      –                         15,000     15,000
                                                                  65,000                    25,000     90,000

Accumulated depreciation                                          5%                        20%
Balance at 31/12/X4                                               20,000                    4,000      24,000
Depreciation X5                                                   2,800                     2,000      4,800
Balance at 31/12/X5                                               22,800                    6,000      28,800
Revaluation at 1/1/X6                                             (22,800)                  –          (22,800)
Balance at 1/1/X6                                                 –                         6,000      6,000
Depreciation X6                                                   3,250                     5,000      8,250
Balance at 31/12/X6                                               3,250                     11,000     14,250

Carrying amount
31/12/X4                                                          30,000                    6,000      36,000
31/12/X5                                                          33,200                    4,000      37,200
31/12/X6                                                          61,750                    14,000     75,750

Tax base of property, plant and equipment
                                           Building  Motor vehicles  Total

Cost
Balance at 31/12/X4                        50,000                    10,000     60,000
Additions X5                               6,000                     –          6,000
Balance at 31/12/X5                        56,000                    10,000     66,000
Additions X6                               –                         15,000     15,000
Balance at 31/12/X6                        56,000                    25,000     81,000

Accumulated depreciation                   10%                       25%
Balance at 31/12/X4                        40,000                    5,000      45,000
Depreciation X5                            5,600                     2,500      8,100
Balance at 31/12/X5                        45,600                    7,500      53,100
Depreciation X6                            5,600                     6,250      11,850
Balance 31/12/X6                           51,200                    13,750     64,950

Tax base
31/12/X4                                   10,000                    5,000      15,000
31/12/X5                                   10,400                    2,500      12,900
31/12/X6                                   4,800                     11,250     16,050

Deferred tax assets, liabilities and expense at 31/12/X4
                                                          Carrying amount     Tax base     Temporary differences

Accounts receivable                                       500                 500          –
Inventory                                                 2,000               2,000        –
Product development costs                                 500                 –            500
Investments                                               33,000              33,000       –
Property, plant & equipment                               36,000              15,000       21,000
TOTAL ASSETS                                              72,000              50,500       21,500

Current income taxes payable                              3,000               3,000        –
Accounts payable                                          500                 500          –
Fines payable                                             –                   –