1)

Gentleman Ltd revealed the following balances for the year ended 30 June 2019.

Account receivable balance was $200,000 net of allowance for doubtful debts. During the year ended 30 June 2019, Gentleman Ltd has created an allowance for bad debts account and provided bad debts expenses of $25,000 for the year ended 30 June 2019.

Which one of the following is correct?

Select one:

None of these

Tax base of Account receivable is $175,000 and the business must account for deferred tax asset of $7,500 related to this item.

Tax base of Account receivable is $225,000 and the business must account for deferred tax liability of $7,500 related to this item.

Tax base of Account receivable is $200,000 and the business must account for deferred tax asset of $7,500 related to this item.

Tax base of Account receivable is $225,000 and the business must account for deferred tax asset of $7,500 related to this item.

2)

Dunkirk Limited has an asset with a carrying value of $120 000. The tax base of this asset is $100 000. The tax rate is 30%. The deferred tax item to be recognised by Dunkirk Limited is:

Select one:

Deferred tax liability of $20 000.

Deferred tax asset of $20 000.

Deferred tax liability of $6000

None of these

Deferred tax asset of $6000

3)

Barry Limited and Allen Limited enter into a finance lease agreement with the following terms:

lease term is 4 years

estimated economic life of the leased asset is 5 years

4 annual rental payments of $15 000 each payable in advance

residual value at the end of the lease term is not guaranteed by the lessee

interest rate implicit in the lease is 8%.

The journal entry recorded by the lessor when the first lease payment is received would be:

Select one:

Dr Cash $15,000

Cr Interest revenue $5,175

Cr Lease receivable $9,825

Dr Cash $15,000

Cr Lease receivable $15,000

Dr Cash $15,000

Cr Reimbursement revenue 15,000

None of these

Dr Lease receivable $15,000

Cr Asset $15,000

4)

or operating cash flows, the presentation method that separates gross cash inflows from cash outflows is the:

Select one:

offset method

None of these

direct method

equity method

indirect method

5)

According to AASB 16/IFRS 16 Leases, because lease payments are received from the lessee over the lease term, the receipts need to be divided into the following components:

	I	II	III	IV
Reduction of the lease receivable	Yes	Yes	No	Yes
Interest revenue earned	Yes	No	Yes	No
Lease receipts	Yes	Yes	Yes	No
Cost of sale expense	No	No	Yes	Yes

Select one:

None of these

III

IV

I

II

6)

Coolongolook Ltd reported the following information at 30 June 2020:

Accounts balances as at 1.7.2019 are as follows

Asset revaluation Surplus 36,000

Retained earnings 20,000

During the year ending 30 June 2020, Coolongolook Ltd made the following transactions.

Made after tax profit of $50,000

Dividend declared not yet paid on 30 June 2020 $10,000

Net increase in Land revaluation $40,000 (ignore tax effect)

What would be the correct equity balances shown in the Statement of Changes in Equity as at 30 June 2020?

Select one:

Asset revaluation surplus $76,000

Retained earnings $70,000

Asset revaluation surplus $50,000

Retained earnings $60,000

None of these

Asset revaluation surplus $76,000

Retained earnings $60,000

Asset revaluation surplus $50,000

Retained earnings $70,000