Question
2018 2017 Sales revenue 9,245,000 Interest revenue 850,000 Royalties revenue 1,450,000 Dividend revenue 150,000 Depreciation-building 147,500 Depreciation-plant 262,500 Depreciation-equipment 75,000 Research and development expenditure 1,650,000
| 2018 | 2017 | |||
Sales revenue | 9,245,000 |
| |||
Interest revenue | 850,000 |
| |||
Royalties revenue | 1,450,000 |
| |||
Dividend revenue | 150,000 |
| |||
Depreciation-building | 147,500 |
| |||
Depreciation-plant | 262,500 |
| |||
Depreciation-equipment | 75,000 |
| |||
Research and development expenditure | 1,650,000 |
| |||
Cost of goods sold | 4,005,000 |
| |||
Warranty expense | 195,000 |
| |||
Wages and salaries expense | 3,475,000 |
| |||
Long service leave expense | 235,000 |
| |||
Interest expense | 305,000 |
| |||
Rates and taxes on property | 145,500 |
| |||
Doubtful debts expense | 142,500 |
| |||
Accounts receivable | 675,000 | 375,000 | |||
Estimated uncollectible debts | 182,000 | 95,000 | |||
Interest receivable | 300,000 | 275,000 | |||
Royalties receivable | 920,000 | 745,000 | |||
Land (at cost) | 2,500,000 | 2,500,000 | |||
Buildings | 3,200,000 | 3,200,000 | |||
Accumulated depreciation-buildings | 442,500 | 295,000 | |||
Plant | 2,100,000 | 2,100,000 |
| ||
Accumulated depreciation-Plant | 787,500 | 525,000 |
| ||
Equipment | 750,000 | 750,000 |
| ||
Accumulated depreciation-equipment | 225,000 | 150,000 |
| ||
Wages and salaries payable | 345,000 | 265,000 |
| ||
Provision for long service leave | 355,000 | 245,000 |
| ||
Provision for warranty claims | 130,000 | 115,000 |
| ||
Interest payable | 100,000 | 100,000 | Additional Information 1. All depreciable assets were acquired on 1 July 2015. For financial reporting purposes, depreciation is recognised on a straight line basis, over 20 years for buildings (estimated residual value $250,000), eight years for plant and 10 years for equipment. For tax purposes, straight line depreciation is applied over 40, 10 and eight years respectively. 2. After reviewing all relevant information, the directors determined that, at 30 June 2018, the plant was impaired by $250,000 (this is not reflected in the amounts presented in the trial balance). 3. On 30 June 2018, after careful consideration, the directors of Bula Island Ltd decided to adopt the fair value model for land; the fair value of land on 1 July 2017 was $3,500,000 and on 30 June 2018 was $3,250,000. 4. The research and development expenditure qualifies for the additional 25% taxation deduction. 5. The tax rate at 30 June 2017 was 30%. On 15 June 2018, legislation was enacted decreasing the tax rate to 25% effective 1 July 2018. Required: 1. Calculate the amount of current tax expense. Use an appropriately labelled table for this task. 2. Prepare a deferred tax worksheet to calculate the amounts for deferred tax assets and deferred tax liabilities for the reporting period 30 June 2018. Use an appropriately labelled table for this task. 3. Prepare journal entries for the income tax expense related items for the reporting period 30 June 2018 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started