(a)

Plant has a carrying amount of $70,000 at period end and a written down value for tax purposes of $50,000. The tax rate is 30%. What is the temporary difference and related deferred tax balance?

		Deductible temporary difference $20,000 Deferred tax asset $6,000.
		Taxable temporary differences $70,000 Deferred tax liability $21,000.
		Taxable temporary difference $20,000 Deferred tax liability $6,000.
		Deductible temporary difference $50,000 Deferred tax liability $15,000.

(b)

Red Limited purchased Plant on 1 July 2022 for $100,000 (accounting depreciation 20% straight line tax depreciation 10% straight line). If the company tax rate is 30%, the deferred tax item that will be recorded by Red Limited at 30 June 2024 is:

		DR Deferred tax liability $10,000.
		DR Deferred tax asset $20,000.
		DR Deferred tax asset $3,000.
		CR Deferred tax liability $6,000.

(c)

A company commenced operations on 1 July 2022. On 30 June 2023, an extract of the balance sheet prepared for internal purposes, but excluding the effect of income tax, disclosed the following information:

Assets		Liabilities
Cash	$40,000	Accounts payable	$80,000
Inventory	100,000	Long service leave	10,000
Plant	300,000
Accumulated depreciation	(45,000)

Additional information:

1. The plant was acquired on 1 July 2016. Depreciation for accounting purposes was 15% (straight-line method), while 5% (straight-line) was used for tax purposes.
2. The tax rate is 30%.

Using the following worksheet, determine the deferred tax asset and deferred tax liability.

	Carrying amount	Future Deductible amount	Tax base	Taxable temporary differences	Deductible temporary differences
Assets
Cash
Inventory
Plant
Liabilities
Accounts payable
Long-service leave
Total temporary differences
Deferred tax liability
Deferred tax asset

The deferred tax asset & liability is:

		Deferred tax asset $10,000. Deferred tax liability $9,000.
		Deferred tax asset $10,000. Deferred tax liability $30,000.
		Deferred tax asset $27,000. Deferred tax liability $34,500.
		Deferred tax asset $12,000. Deferred tax liability $0.