ACX2100 Chap.8 The Deferred Tax Worksheet, Rate Changes and Revaluations
The Deferred Tax Worksheet, Rate Changes and Revaluations
The deferred-tax worksheet converts tax bases into closing DTA and DTL, then compares those balances with opening amounts to determine the current-period movement. List carrying amount, future deductible amount where relevant, tax base, taxable temporary differences and deductible temporary differences. Exclude permanent differences and apply specific recognition exceptions explicitly.
Multiply the gross columns by the enacted or substantively enacted tax rate. An increase in DTL ordinarily creates deferred tax expense; an increase in DTA ordinarily creates a benefit. A decrease in DTL is ordinarily a benefit; a decrease in DTA is ordinarily expense. Combine those movements with current tax payable and prove the journal.
A tax-rate change remeasures the existing temporary difference at the new rate and posts only the balance adjustment. A revaluation can increase accounting carrying amount while tax base remains unchanged, creating a DTL; its tax effect follows the underlying OCI item. Disclosures reconcile tax expense, identify outside-profit-or-loss effects and explain unrecognised deductible benefits.
The source’s one unbalanced summary journal is excluded rather than silently repaired; Kerry and Ironman amounts are independently re-added.
What this chapter covers
- 01
Deferred-tax worksheet columns
- 02
Permanent and excluded differences
- 03
Closing gross DTL and DTA
- 04
Opening-to-closing movements
- 05
Combined current and deferred tax journal
- 06
Kerry Ltd verified movement
- 07
Unbalanced source summary excluded
- 08
Ironman rate change from 40% to 30%
- 09
Tax effect of land revaluation through OCI
- 10
Major AASB 112 disclosure themes
- 11
DTA recognition judgement
AskSia-authored practice — post a complete current and deferred-tax journal
- DTLDTL increases from $39,000 to $48,000: credit DTL $9,000 and ordinarily recognise deferred tax expense.
- DTADTA increases from $25,000 to $31,000: debit DTA $6,000 and ordinarily recognise a deferred tax benefit.
- DeferredNet deferred-tax expense is $9,000 − $6,000 = $3,000.
- ExpenseTotal income tax expense is current $72,000 + deferred $3,000 = $75,000.
- ProofJournal: Dr tax expense $75,000; Dr DTA $6,000; Cr current tax payable $72,000; Cr DTL $9,000. Both sides total $81,000.
Key terms
- Deferred-tax movement
- Difference between required closing and opening DTA or DTL, which is the amount posted for the period.
- Rate-change adjustment
- Remeasurement of an existing temporary difference at a new enacted or substantively enacted rate.
- Tax effect of revaluation
- DTL or DTA arising because accounting fair value changes without matching tax-base movement; recognised with the underlying item.
- Effective tax reconciliation
- Explanation of the difference between tax expense and accounting profit multiplied by the applicable rate.
- Unrecognised DTA
- Potential benefit from deductible differences or losses not recognised because the probability criterion is not met.
The Deferred Tax Worksheet, Rate Changes and Revaluations FAQ
Do I post the full closing DTL?
No. Compare closing DTL with opening DTL and post the increase or decrease. The same applies separately to DTA.
What are the Kerry totals?
TTD $459,000 and DTD $172,000 give closing DTL $137,700 and DTA $51,600 at 30%. Movements produce Dr DTA $10,000, Dr tax expense $27,700 and Cr DTL $37,700.
How does a tax-rate decrease affect deferred balances?
Remeasure the temporary difference at the new rate. A smaller DTL is ordinarily a benefit; a smaller DTA is ordinarily expense, with recognition location following the underlying item.
Where does tax on a revaluation go?
If the underlying revaluation gain is recognised in OCI, the related deferred-tax effect is also recognised in OCI rather than current profit or loss.
Exam move
Build worksheets in two passes. First derive closing gross balances without thinking about the journal. Second compare each deferred account with opening and write debit or credit movement. Add current tax only after those movements are proved. Rehearse Kerry’s totals, Ironman’s 40-to-30% remeasurement and the $100,000-to-$120,000 land revaluation with $6,000 DTL and $14,000 net surplus.
Then solve a fresh full journal and prove equality. Never copy the damaged source summary: reconstruct every figure from tax bases, rates and opening balances. Keep three proofs beside every full answer. The closing-balance proof re-adds all taxable and deductible differences at the applicable rate. The movement proof compares each closing deferred-tax account with its own opening balance.
The journal proof shows total debits equal total credits after current tax and any OCI-routed amount are included. For rate changes, remeasure the whole closing temporary difference rather than only the current-year movement. For revaluations, split the gross asset increase into deferred tax and net surplus before posting.
Change the tax rate or opening balances in a completed example and predict exactly which lines move; this reveals whether the method is structural or memorised.
Working through The Deferred Tax Worksheet, Rate Changes and Revaluations in ACX2100? Sia is AskSia’s AI Accounting tutor — ask any ACX2100 The Deferred Tax Worksheet, Rate Changes and Revaluations question and get a clear, step-by-step explanation grounded in how ACX2100 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
