I have a few questions on accounts in relation to CT2 2018Q19: it is stated that "all depreciation has been charged for the year". Normally questions will state depreciation is on what basis, and the book value is cost - accumulated depreciation - depreciation for the year, so depreciation hasn't been charge for the year? in relation to chapter questions chp12/Q2: when it is stated that tax is not paid for the past year, why is there still tax provision? how would I know that the depreciation is 10% Thanks
Hi That's right. This question is unusual in that it states that tall depreciation has been charged for the year and so is recorded in the accumulated depreciation figures in the trial balance. Normally questions have just the accumulated past years depreciation in the trial balance and state on which basis depreciation for the latest year is to be charged as you describe.
Tax is due in respect of the past year, it is just that the company did not actually pay that tax during the year itself. So, it is a current liability at the end of the year (ie the company will have to pay the tax during the next year). For the depreciation, the question indicates that assets are depreciated on a straight line basis over 10 years. Hope these help Lynn
