Deferred tax – introductory example
Version (a)
On Jan 01, 01, entity E acquires software for CU 12, which is available for use on the same day. The software”s useful life is three years according to IFRS and four years under E”s tax law.
Version (b)
On Jan 01, 01, entity E acquires software for CU 12, which is available for use on the same day. The software”s useful life is four years according to IFRS and three years under E”s tax law.
Required
Prepare any necessary entries relating to deferred tax in E”s financial statements as at Dec 31, 01. The tax rate is 25%. Assume for simplification purposes that deferred tax assets (if any) meet the recognition criteria of IAS 12.