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Questions and Answers
What is the depreciation expense in Year 2 using the Written Down Value (WDV) method?
What is the depreciation expense in Year 2 using the Written Down Value (WDV) method?
42,000
Calculate the taxable income in Year 1.
Calculate the taxable income in Year 1.
60,000
Determine the tax liability in Year 2.
Determine the tax liability in Year 2.
1,596.00
What is the book value of the asset at the end of Year 3?
What is the book value of the asset at the end of Year 3?
Calculate the total depreciation expense over the 5-year life of the asset.
Calculate the total depreciation expense over the 5-year life of the asset.
Will the company be able to claim the entire depreciation expense for tax purposes over the asset's life?
Will the company be able to claim the entire depreciation expense for tax purposes over the asset's life?
In which year is the difference between PBT and taxable income the highest, and what is the value?
In which year is the difference between PBT and taxable income the highest, and what is the value?
Determine the cumulative depreciation at the end of Year 4.
Determine the cumulative depreciation at the end of Year 4.
If the tax rate increased to 35% in Year 3, how would the deferred tax asset/liability be affected?
If the tax rate increased to 35% in Year 3, how would the deferred tax asset/liability be affected?
Explain why the MAT rate might be relevant in this scenario.
Explain why the MAT rate might be relevant in this scenario.
Flashcards
What is PBT?
What is PBT?
Profit Before Tax (PBT) remains constant at INR 50,000 for each of the 5 years.
What is MAT?
What is MAT?
MAT is a minimum tax payable regardless of profit levels, set at 19%.
Tax Rate
Tax Rate
The standard tax rate applied to profits is 30%.
WDV Depreciation
WDV Depreciation
WDV depreciation reduces the asset value over its life: Year 1: -140000, Year 2: -42000, Year 3: -12600, Year 4: -3780, Year 5: -1620.
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Tax loss carry forward
Tax loss carry forward
Tax loss carry forward ending balance on year 3 is 0
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- A tax schedule is to be created using the provided information.
- Asset Value: INR 200,000
- Life of Asset: 5 years
- Profit Before Tax (PBT) is constant for 5 years at INR 50,000
- Minimum Alternate Tax (MAT) rate: 19%
- Tax rate: 30%
- Depreciation Method: Written Down Value (WDV)
WDV Depreciation Schedule
- Year 1: -140,000
- Year 2: -42,000
- Year 3: -12,600
- Year 4: -3,780
- Year 5: -1,620
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