Reference no: EM132877637

Problem - On 1 January 2020, the deferred tax liability brought forward for Bubu Bhd was RM6,000,000.

At 31 December 2020, you were asked to calculate the amount of deferred tax charged in the statement of comprehensive income.

The following transactions took place during 2020:

1. During the year, plant was revalued and surplus was RM6,000,000. At the end of the year the carrying amount of the plant was RM70,000,0000 and tax base was RM44,000,000.

2. Development expenditure of RM14,000,000 was capitalized in accordance with MFRS 138 but it is deducted for tax purpose. There was no amortisation during the year.

3. The company has made provision for legal settlement of RM2,000,000. The expenditure will only be tax deductible when paid.

4. Bubu Bhd has also recognised interest income receivable of RM4,200,000 but none has been received yet.

5. The trade receivables were disclosed at RM5,000,000 after providing for doubtful debts of RM1,000,000.

6. Financial instruments were classified as at fair value through profit or loss of RM24,000,000. The cost of these financial instruments was RM20,000,000.

7. The tax payable for the year was calculated at RM7,400,000.

8. Tax rate is 30%.

Required - For the financial year ending 31 December 2020:

(a) Show a table showing the carrying amounts, tax base and temporary differences for each of the items above.

(b) Calculate the amount of tax expense as charged in the statement of profit and loss.