Nahi Hoga Limited

Calculation on opening Deferred Tax Asset/Liability:

PPE 350,000 DTL (1,000,000 x 35%)

Prov for BD (70,000) DTA (200,000 x 35%)
Prepaid Rent 280,000 DTL (800,000 x 35%)
Leases (4,803) DTA ( (316,987 - 303,263) x 35%)
Interest Pay (42,000) DTA (120,000 x 35%)
Accrued Exp (26,250) DTA (75,000 x 35%)
486,947 Deferred Tax Liability
Calculation of Taxable Income
Accounting Income W1 10,214,286

Adjustments:
Depreciation W2 (289,674) DTE
Intangibles (260,000 - 130,000) 130,000 DTI
Bad Debts W3 + W4 430,000 DTI
Leases 7,514 DTI
Interest on loan W5 60,000 DTI
Accrued Expenses W6 40,000 DTI
Prepaid Rent W7 (400,000) DTE
Legal Penalties 120,000 PD
Interest capitalized (150,000) DTE
Liabilities older than 3 years 250,000 DTI
- Taxable Income 10,412,126
Dividend Received (220,000) PD to be taxed at 10%
10,192,126
Tax 30% 3,057,638
Add: Dividend Income Tax 10% 22,000
3,079,638
Add: Prior year Tax - CT 152,500
Total Current Tax 3,232,138

Reconciliation:

Tax on accounting profit 3,064,286

Permenant Differences Adjustments:

- Legal Penalties 36,000
- Prior year tax 152,500
- Dividend remaining 20% (44,000)
- Change of tax rate W8 (69,564)

Current Tax Expense 3,232,138

Deferred Tax Income W8 (92,916) 3,139,222
 Workings
W1
Retained Earnings
Dividend 150,000 Opening 6,000,000
Profit FTY 7,150,000

Closing 13,000,000

W2
Depreciation
ACC Base Tax Base Difference
Gross CA oepning 6,200,000
Less: Leased (303,263)
CA Op Owned Assets 5,896,737 4,896,737 1,000,000 DTL
Depreciation 1,179,347 1,469,021 289,674 DTE
CA Closing 4,717,390 3,427,716 1,289,674 DTL

W3
Receivable
Opening 600,000 Cash 3,000,000
Sales 5,000,000 Write off (Bal Fig) 500,000

Closing 2,100,000

W4
Provision for Bad Debts
Opening 200,000
FTY P&L (Bal Fig) 430,000

Closing 630,000

W4
Leases

Liability
Year Op Interest Principle Closing
2016 379,079 37,908 (62,092) 316,987
2017 316,987 31,699 (68,301) 248,685
2018 248,685 24,869 (75,131) 173,554
Depreciation
ROUA 379,079
Depreciation 75,816

Exp as per Tax 100,000

Exp as per Accounts 107,514
(7,514)

W5
Interest Payable
Interest
Opening Loan 1,000,000 120,000
During the year loan 200,000 12,000
Interest Exp 132,000

Interest Payable
Cash Paid (Bal fig) 72,000 Opening 120,000
FTY P&L (Bal Fig) 132,000

Closing 180,000

W6
Accrued Expenses
Paid 25,000 Opening 75,000
Profit FTY (Bal fig) 65,000

Closing 115,000

W7
Prepaid rent
Opening 800,000 Rent Expired 200,000
Cash paid (Bal fig) 600,000

Closing 1,200,000
 W8
Deffered Tax Asset/Liability
Change in tax rate 69,564 Opening 486,947
DTI FTY 23,352

Closing 394,031

Total Taxable Differences (839,674)

Total Deductible Differences 917,514
77,841 Net Deductible Difference