Exercise 6.8 ★★★ CALCULATION OF DEFERRED TAX, AND ADJUSTMENT ENTRY The following information was extracted from the records of Bulb Ltd as at 30 June 2013: Asset (liability) Carrying amount Tax base Accounts receivable Motor vehicles Provision for warranty Deposits received in advance £150 000 (165 000) (12 000) (15 000) £175 000 125 000 0 0 The depreciation rates for accounting and taxation are 15% and 25% respectively. Deposits are taxable when received, and warranty costs are deductible when paid. An allowance for doubtful debts of £25 000 has been raised against accounts receivable for accounting purposes, but such debts are deductible only when written off as uncollectable. Required 1. Calculate the temporary differences for Bulb Ltd as at 30 June 2013. Justify your classifi cation of each difference as either a deductible temporary difference or a taxable temporary difference. 2. Prepare the journal entry to record deferred tax for the year ended 30 June 2013 assuming no deferred items had been raised in prior years.