Read the scenario described here then calculate the amount of deferred taxes recognized by Company A with respect to the equipment described as of 31 December 20X1. As of 31 December 20X1, Company A carried a fixed asset at a carrying amount of 1,100 in its accounting balance sheet. In its tax books, the related fixed asset was carried at cost, which was 1,700. Company A plans to realize this fixed asset through sale during 20X2 at its carrying amount as it is no longer needed for manufacturing purposes. In accordance with the local tax legislation, the applicable tax rate varies depending on the manner of recovery of related assets. Until the end of 20X1, the applicable tax rates were as follows: • The sale of assets was taxed at 30% • Internal consumption was taxed at 20% On 1 January 20X2, the local tax authority enacted an increase of tax rates effective 1 January 20X2, as follows: • 35% for sale of assets • 25% for internal consumption Calculate the amount of deferred taxes recognized by Company A with respect to this equipment as of 31 December 20X1.
Deferred tax asset of 210
Deferred tax asset of 180
Deferred tax liability of 180
Deferred tax liability of 210