Comparison of a Deferred Taxation Miscellaneous Essay
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The tax payable on the net reversing timing difference is £6,000. If the asset is sold then the written down value for tax purposes (£200,000 - £100,000 = £100,000) is £20,000 larger than the written down value for accounts purposes (£200,000 - £80,000 = £120,000). An unavoidable liability to tax on the reversing timing difference arises of £6,000.