Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a non-current asset (a machine) was purchased by l

A non-current asset (a machine) was purchased by Lotus plc on 1 July 2020 at...

60.1K

Verified Solution

Question

Finance

A non-current asset (a machine) was purchased by Lotus plc on 1 July 2020 at a cost of $50,000. The company prepares its annual accounts to 31 March in each year. The policy of the company is to depreciate such assets at the rate of 15% straight line (with depreciation being charged pro rata on a time-apportionment basis in the year of purchase). The company was granted capital allowances at 25% per annum on the reducing balance method (such capital allowances are apportioned pro rata on a time-apportionment basis in the year of purchase).

The rate of corporation tax has been as follows:

Year ended

31 Mar 2021 25%

31 Mar 2022 35%

31 Mar 2023 25%

31 Mar 2024 24%

31 Mar 2025 24%

Based on the given information,

a) CALCULATE the deferred tax provision using both the deferred method and the liability method. (25 marks)

b) EXPLAIN why the liability method is considered to place the emphasis on the statement of financial position, whereas the deferred method is considered to place the emphasis on the statement of income. JUSTIFY your answer.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Which hypothesis CANNOT be tested?Grass grows faster in the spring than in the summer.People who...

Calculus
1.2K views

Kai says the amplitude of y cos x is 2 since the distance between the...

Chemistry
1.2K views

The Winkler method for dissolved oxygen in water is based on the rapid oxidation of solid...

Basic Math
1.2K views

Drag the measurements to the containers to show equal length 75 ft 900 in 360...

Accounting
1.2K views

ACC272- Chp19 Problemm ST Corp has the following cost...

Accounting
1.2K views

a. 14. StartupAndFly is authorized to issue up to 5 million shares. At...

Accounting
1.2K views

Kate's Kale Chips produces a healthy snack made primarily of kale. Each bag of the...

Accounting
1.2K views

Elroy Corporation repurchased 3,000 shares of its own stock for $30 per share. The stock...

Accounting
1.2K views

Pureform, Incorporated, uses the weighted-average method in its process costing system. It manufactures a product...

Accounting
1.2K views

3 You are a commercial lending officer for a local bank. Lester Corporation has 4...

Accounting
1.2K views

Venice Ghost Tours sells guided ghost-walks of the alleyways of Venice, Italy. Last month, they...

Finance
1.2K views

answer asap and i will upvote Smith Co. has the following target...