Joy Ltd. wishes to calculate tax base of its assets and liabilities as on 31st March 20X5. The Balance Sheet has been adjusted by current tax…

Joy Ltd. wishes to calculate tax base of its assets and liabilities as on 31st March 20X5. The Balance Sheet has been adjusted by current tax expense. Summarised Balance Sheet as on 31st March 20X5: ASSETS ₹ Non-current Assets Property, Plant and Equipment 12,00,000 Intangible Assets-Product Development Costs 60,000 Investment in Subsidiary - Pall Ltd. 4,40,000 Current Assets Trade Investments 2,08,000 Trade Receivables 6,26,000 Inventories 3,04,000 Cash and Cash Equivalents 1,80,000 TOTAL ASSETS 30,18,000 EQUITY & LIABILITIES ₹ Equity Share Capital 12,00,000 Accumulated Profits 7,37,438 Revaluation Surplus 88,000 Non-current Liabilities Deferred Income - Government Grants 40,000 Liability for Product Warranty Costs 16,000 Deferred Tax Liability (From 20X3-20X4) 22,162 Current Liabilities Trade Payables 7,64,000 Health Care Benefits for Employees 70,000 Current Tax Liability 80,400 TOTAL EQUITY & LIABILITIES 30,18,000 Notes: (a) Depreciation expense for the year 20X4-20X5 allowable in accordance with tax laws is 2,06,000. Accounting depreciation included in operating costs is 1,70,000. Cost of PPE is 16,00,000 and Joy Ltd has deducted expenses of 4,16,000 in its tax returns prior to the financial year 20X4-20X5. Moreover, as on 31st March 20X5, Joy Ltd for the first time revalued its property, plant and equipment to fair value of 12,00,000 (revaluation surplus = 88,000). (b) In 20X1-20X2, Joy Ltd incurred product development costs of 1,00,000. These costs were recognized as an asset and being amortized over useful period of 10 years. For tax purposes, Joy Ltd deducted full product development costs in 20X1-20X2. (c) Trading investments were acquired in 20X3-20X4 with cost of 2,30,000. These investments are classified at fair value through profit and loss and thus recognized at their fair value. Fair value adjustments are not tax deductible. (d) Bad debt provision amounts to 1,30,000 and relates to 2 debtors: Debtor A -80,000 (receivable originated in 20X2-20X3 and 100% provision was recognized in 20X3-20X4) andDebtor B -50,000 (receivable originated in 20X3-20X4 and 100% provision was recognized in 20X4-20X5). Tax law allows deduction of 20% of provision for debtors overdue for more than 1 year, another 30% for debtors overdue for more than 2 years and remaining 50% for debtors overdue for more than 3 years. (e) Joy Ltd accounts for inventory obsolescence provision. New provision created in 20X4-20X5 was - 10,800 (total provision:18,000). This provision is not tax deductible, as it is a general provision. (f) Government grants are not taxable. Government grant received in 20X4-20X5 is appearing in the balance sheet. (g) In 20X4-20X5, Joy Ltd made a further provision for product warranty of 5,000. Such provisions for product warranty costs are not tax deductible until the claims are paid or settled. During the year 20X4-20X5, warranty claims were paid/settled for 6,200. (h) During the year 20X4-20X5, Joy Ltd has introduced health care benefits for employees. The expenses are allowable as deduction in tax only when benefits are paid but in line with Ind AS 19, such liability is recognized in profit or loss when employees provide service. Calculate temporary differences and deferred tax for Joy Ltd as on 31st March 20X5 assuming the tax rate is 32%.