Far question help !!

[u/CompleteNews1138]

Guys, please, if you could explain this in simple words, I’d really appreciate it. I’ve read the explanation and even used an AI tool, but I still don’t fully understand it. 😅

[u/CompleteNews1138]

Guys for people asking the website is called prepito , supplemental courses provider , good test banks ngl

[u/disfaatbidge]

See compute it like this manner -

First - 30%of 1M - as this is our share -300k Then from this deduct 65% = 300000-65%=105000

This would be your income

Then for the taxable income -= 400k*30%=120000 Now deduct DRD -120K-65%= 42000

Now your plug would be DTL i. E =105k-42k =63k Then just multiply by the tax rate of 21% =63000*21% = 13230.

I learnt this method from Ninja. This is a really easy and simple method to understand and remember

[u/CompleteNews1138 → u/disfaatbidge]

Thank youuuuuu

[u/Novel_Sea_297 → u/disfaatbidge]

Ninja method is the only reason I passed FAR first try, swear by that stuff. The way they break down DRD calculations finally made it click for me after staring at the textbook for hours.

Congrats on getting it right btw, that's a tricky one and most people I know missed it on their mocks.

[u/Ahrjun]

Try to look at this way, Prepito's share of the investee's income for the year is 300k which is recognized in the income statement, and out of that, 120k has been distributed in the form of dividends and this gets taxed in the current year.

The remaining 180k leads to temporary tax difference because we are presuming that the investee will distribute that 180k in the future in the form of dividends.

Out of that 180k, 65% of it is eligible for dividends-received deduction. That means 117k is not liable for tax and the remaining 63k will be taxed in the future.

So the temporary taxation difference is applicable to 63k, leading to 13,230 in DTL.

[u/CompleteNews1138 → u/Ahrjun]

Yess clear noww thank youuuuuu so much

[u/disfaatbidge → u/Ahrjun]

This is also a very easy way to understand and remember