Deferred tax @ IP

Based on HKAS 12, "Income Tax":

Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.

Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base.

Tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose.

Based on above, tax base of an asset is calculated as carrying amount - future taxable amounts + future deductible amounts.

As the investment property is stated as fair value, therefore, the land and building portion are treated as single asset as a whole in accordance with HKAS 40. Therefore, the tax base of IP is
Carrying amount = $700,000
Future taxable amounts = $600,000
Future deductible amounts = $192,000

Tax base = $700,000 - $600,000 + $192,000 = $292,000
Deferred tax = $292,000 x 16.5% = $48,180

Carrying value Tax base Def tax 16.5%

Comm Bldg 200,000 192,000 1,320
Non-ranking 400,000 400,000 -
Valuation 100,000 - 16,500

17,820