QUESTION 1 (Total: 40 marks)

Soon Seng Berhad (SSB) has in its financial statement unadjusted deferred liability amount of RM5 million as at 31 December 2020. The following transactions took place during the year 2020:

1. During the year SSBs plant was revalued and surplus was RM3 million. At the end of the year, the carrying amount of plant was RM15 million and tax based was RM10 million. Gains on revaluation are taxable on sale at 15%.

2. On 1 January 2020, SSB bought a motor vehicle for RM100,000 and SSB expects to use it for five years. Capital allowance for the first year is 50%.

3. SSB provides general provision for doubtful debts of 1%. Trade receivables at the end of the year was RM5 million. Last year provision stood at RM40,000.

4. Development expenditure of RM5 million was capitalized in accordance with MFRS138 but is deducted for tax purposes. There was no amortization for the year.

5. For the year, SSB also provides provision for warranty of RM200,000.

6. Entertainment expenses for RM50,000 are for sourcing potential clients overseas. The entertainment expenses were accidentally claimed for deduction during year 2020 submission.

7. SSB has recognized income receivable of RM1 million but none has been received.

8. Interest expenses of RM2 million has not been paid.

9. SBB Bought financial assets for RM100,000. At the end of the year these financial assets value stood at RM150,000. SBB classified these financial assets as Fair Value through Profit or Loss.

10. Income tax is at 25%. The tax expenses for the year (before adjustments) stood at RM1 million.

Required:

a) In each of the item listed from (1) to (9) calculate the amount of deferred tax liability or assets that SSB will show in their financial statements. Justify your answers with reasons and journals. (30 marks)