Madaraka Limited Amount Of Deferred Taxes Assignment 

Question Description

Madaraka Limited, a calendar year firm, purchased a bulldozer for Ksh 80 million on 1st January 2016. The asset had a life of 5 years and was depreciated using straight-line basis for accounting purposes while capital allowances were claimed using reducing balance basis at 60% for tax purposes. At the beginning of year three, the government made a sudden announcement reducing tax rate from 30% to 20%. This is only asset giving rise to deferred taxes in the orgauring the penization driod under consideration.


Compute and disclose the amount of deferred taxes that would be disclosed in statements of financial position and comprehensive incomes in the five years from 2016 to 2020.