Difir Inc owns the following property, plant and equipment at 1 January 2004 (amounts in thousands of euro):
|
|
Cost
|
Accumulated Depreciation
|
Carrying Value
|
Tax Base
|
|
Machinery
|
900
|
180
|
720
|
450
|
|
Land
|
500
|
-
|
500
|
-
|
|
Buildings
|
1,500
|
300
|
1,200
|
-
|
You are provided with further information in order to determine the deferred tax balance for 2004 and 2005:
• Machinery is depreciated on the straight-line basis over five years. It was acquired at the beginning of 2003.
• Land is not depreciated.
• Buildings are depreciated on the straight-line basis over 25 years.
• Depreciation of office buildings is not deductible for tax purposes. For machinery, tax depreciation is granted over a period of three years in the ratio of 50/30/20 (per cent) of cost, consecutively.
• The accounting profit before tax was EUR 300,000 for the 2004 financial year and EUR 400,000 for 2005. These figures include non-taxable revenue of EUR 80,000 in 2004 and EUR 100,000 in 2005.
• Difir Inc had a tax loss for the financial year ended 31 December 2003 of EUR 250,000.
• The tax rate for 2003 was 35 per cent, and for 2004 and 2005 it was 30 per cent.