Deferred tax – change in the tax rate
Entity E holds the following shares which were each acquired for CU 900:
Shares of entity A: These shares meet the definition of “held for trading” (IFRS 9, Appendix A). Therefore, they are accounted for at fair value through profit or loss (IFRS 9.4.1.1–9.4.1.4, 9.5.7.1b, and 9.5.7.5). On Dec 31, 01, the carrying amount of these shares is CU 1,000 according to IFRS and CU 900 for tax purposes.
Shares of entity B: These shares are accounted for at fair value through other comprehensive income (IFRS 9.4.1.1–9.4.1.4, IFRS 9.5.7.1b, and 9.5.7.5). On Dec 31, 01, the carrying amount of these shares is CU 1,000 according to IFRS and CU 900 for tax purposes. The fair value reserve is CU 100.
On Dec 31, 01, the tax rate is changed from 30% to 25%.
Posting status:
All necessary entries have already been effected correctly. However, the change in the tax rate has not yet been taken into account.
Required
Prepare any necessary entries in E”s financial statements as at Dec 31, 01.
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