Permai Bhd is one of the main manufacturers and suppliers of industrial chemical products and equipment that had been incorporated in 2010. The following is the carrying amount of asset and liabilities of the company as at 31 December 2019: Carrying amount (RM) Property, plant and equipment 249,200 Intangible assets 138,000 Investment in fixed deposit 107,000 Account receivable 96,700 Interest receivable 10,700 Inventory 206,000 Bank 129,000 Trade payables 197,000 Accrued interest 15,600 Penalties payable 15,500 Unearned revenue 45,300 10% Loan 156,000 Additional information: The cost of the property, plant and equipment is RM356,000 when it was acquired in 2015. Depreciation expense for property, plant and equipment is calculated at the rate of 10% per year and capital allowance is 20% per year for the first three years from the cost of the assets. The intangible assets consist of development expenditure of Permai Bhd’s R&D project incurred during the year that was qualified to be capitalised. Interest receivable is interest revenue earned from the investment in fixed deposit. Meanwhile, interest expense was incurred due to a 10% loan from a financial institution. Unearned revenue is payment received under a Permai Bhd’s policy that require new clients to make advance payments before the delivery of goods is made to them. The balance of deferred tax liability on 1 January 2019 was RM8,500. The tax rate for the assessment year 2019 was 24%. REQUIRED: Determine the tax base of asset and liabilities for Permai Bhd and calculate the temporary difference as at 31 December 2019. Indicate whether the temporary difference is taxable or deductible. Compute the deferred tax expenses for 2019. Explain the effect on the computation of deferred tax expense if the tax rate for the assessment year 2019 differs from the tax rate for the assessment year 2018. Calculate the adjusted deferred tax expense of Permai Bhd assuming that the tax rate used in 2018 was 22%.

Permai Bhd is one of the main manufacturers and suppliers of industrial chemical products and equipment that had been incorporated in 2010. The following is the carrying amount of asset and liabilities of the company as at 31 December 2019: Carrying amount (RM) Property, plant and equipment 249,200 Intangible assets 138,000 Investment in fixed deposit 107,000 Account receivable 96,700 Interest receivable 10,700 Inventory 206,000 Bank 129,000 Trade payables 197,000 Accrued interest 15,600 Penalties payable 15,500 Unearned revenue 45,300 10% Loan 156,000 Additional information: The cost of the property, plant and equipment is RM356,000 when it was acquired in 2015. Depreciation expense for property, plant and equipment is calculated at the rate of 10% per year and capital allowance is 20% per year for the first three years from the cost of the assets. The intangible assets consist of development expenditure of Permai Bhd’s R&D project incurred during the year that was qualified to be capitalised. Interest receivable is interest revenue earned from the investment in fixed deposit. Meanwhile, interest expense was incurred due to a 10% loan from a financial institution. Unearned revenue is payment received under a Permai Bhd’s policy that require new clients to make advance payments before the delivery of goods is made to them. The balance of deferred tax liability on 1 January 2019 was RM8,500. The tax rate for the assessment year 2019 was 24%. REQUIRED: Determine the tax base of asset and liabilities for Permai Bhd and calculate the temporary difference as at 31 December 2019. Indicate whether the temporary difference is taxable or deductible. Compute the deferred tax expenses for 2019. Explain the effect on the computation of deferred tax expense if the tax rate for the assessment year 2019 differs from the tax rate for the assessment year 2018. Calculate the adjusted deferred tax expense of Permai Bhd assuming that the tax rate used in 2018 was 22%.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 6RE: Oz Corporation has the following assets at year-end: Patents (net), 26,000; Land, 50,000; Buildings,...

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Carrying amount (RM)

Property, plant and equipment	249,200
Intangible assets	138,000
Investment in fixed deposit	107,000
Account receivable	96,700
Interest receivable	10,700
Inventory	206,000
Bank	129,000
Trade payables	197,000
Accrued interest	15,600
Penalties payable	15,500
Unearned revenue	45,300
10% Loan	156,000

Additional information:

The cost of the property, plant and equipment is RM356,000 when it was acquired in 2015. Depreciation expense for property, plant and equipment is calculated at the rate of 10% per year and capital allowance is 20% per year for the first three years from the cost of the assets.
The intangible assets consist of development expenditure of Permai Bhd’s R&D project incurred during the year that was qualified to be capitalised.
Interest receivable is interest revenue earned from the investment in fixed deposit.
Meanwhile, interest expense was incurred due to a 10% loan from a financial institution.
Unearned revenue is payment received under a Permai Bhd’s policy that require new clients to make advance payments before the delivery of goods is made to them.
The balance of deferred tax liability on 1 January 2019 was RM8,500. The tax rate for the assessment year 2019 was 24%.

REQUIRED:

Determine the tax base of asset and liabilities for Permai Bhd and calculate the temporary difference as at 31 December 2019. Indicate whether the temporary difference is taxable or deductible.
Compute the deferred tax expenses for 2019.
Explain the effect on the computation of deferred tax expense if the tax rate for the assessment year 2019 differs from the tax rate for the assessment year 2018. Calculate the adjusted deferred tax expense of Permai Bhd assuming that the tax rate used in 2018 was 22%.

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