FAC3701 ASSIGNMENT
Part a: Calculate the deferred tax balance
Deferred tax balance as at 30 June 2024
1. *Inventory*: Difference of R220,000 (Weighted average vs FIFO). Tax rate = 28%.
- Deferred tax liability = R220,000 * 28% = R61,600.
2. *Machinery*: Carrying amount R675,000, Tax base R540,000.
- Difference = R135,000. Tax rate = 28%.
- Deferred tax liability = R135,000 * 28% = R37,800.
3. *Allowance for credit losses*: Carrying amount R80,000. 25% deductible for tax.
- Tax base difference = R80,000 * 25% = R20,000.
- Deferred tax asset = R20,000 * 28% = R5,600.
Deferred tax balance (30 June 2024) = R61,600 + R37,800 – R5,600 = R93,800 *Deferred tax liability*.
Deferred tax balance as at 30 June 2025
1. *Inventory*: Difference of R80,000. Tax rate = 27%.
- Deferred tax liability = R80,000 * 27% = R21,600.
2. *Machinery*: Carrying amount R350,000, Tax base R360,000.
- Difference = -R10,000. Tax rate = 27%.
- Deferred tax asset = R10,000 * 27% = R2,700.
3. *Allowance for credit losses*: Carrying amount R100,000. 25% deductible.
- Deferred tax asset = R100,000 * 25% * 27% = R6,750.
Deferred tax balance (30 June 2025) = R21,600 – R2,700 – R6,750 = R12,150 *Deferred tax liability*.
Part a: Calculate the deferred tax balance
Deferred tax balance as at 30 June 2024
1. *Inventory*: Difference of R220,000 (Weighted average vs FIFO). Tax rate = 28%.
- Deferred tax liability = R220,000 * 28% = R61,600.
2. *Machinery*: Carrying amount R675,000, Tax base R540,000.
- Difference = R135,000. Tax rate = 28%.
- Deferred tax liability = R135,000 * 28% = R37,800.
3. *Allowance for credit losses*: Carrying amount R80,000. 25% deductible for tax.
- Tax base difference = R80,000 * 25% = R20,000.
- Deferred tax asset = R20,000 * 28% = R5,600.
Deferred tax balance (30 June 2024) = R61,600 + R37,800 – R5,600 = R93,800 *Deferred tax liability*.
Deferred tax balance as at 30 June 2025
1. *Inventory*: Difference of R80,000. Tax rate = 27%.
- Deferred tax liability = R80,000 * 27% = R21,600.
2. *Machinery*: Carrying amount R350,000, Tax base R360,000.
- Difference = -R10,000. Tax rate = 27%.
- Deferred tax asset = R10,000 * 27% = R2,700.
3. *Allowance for credit losses*: Carrying amount R100,000. 25% deductible.
- Deferred tax asset = R100,000 * 25% * 27% = R6,750.
Deferred tax balance (30 June 2025) = R21,600 – R2,700 – R6,750 = R12,150 *Deferred tax liability*.
