Additional information

1. a) Quarterly income tax instalments paid during the year were: 28 October 2013

   28 January 2014 28 April 2014 Note: Final instalment due on July 28

2. b) The following items are exempt from tax rules:

   1. Royalties are non-assessable

   2. Entertainment expenses are non-deductible

$18,000 18,000 17,000

c) The tax depreciation rate for plant (purchased 3 years ago for $150,000) is 20%.

4. d) Tax depreciation on buildings is equal to accounting depreciation on buildings.

5. e) During the year, the following cash amounts were paid:

   Annual leave $52,000

   Insurance 6,500

6. f) Bad debts of $2,500 were written off against the allowance for doubtful debts during the year.

7. g) Newcastle Ltd has tax losses amounting to $15,000 carried forward from prior years. These c a nbe offset against current years taxable profit.

8. h) Land was incrementally revalued by $10 000 during the current period.

9. i) The deferred tax balances at 30 June 2013 were:

   1. Deferred tax assets $10,500

   2. Deferred tax liabilities $6,000

10. j) The company tax rate is 30%.

Required

1. Determine the balance of any current and deferred tax assets and liabilities for Newcastle Ltd at 30 June 2014.

2. Prepare the journal entries for the year ended 30 June 2014.

3. Calculate the income tax expense for the year ended 30 June 2014.

4. Extension: explain the impact if the Land revaluation had occurred in a prior period rather than the current period.

Newcastle Ltd determined an accounting profit before tax of $256,000 for the year ended 30 June 2014. Included in this profit are the following items: Royalty revenue (non-assessable) Annual leave expense Depreciation expense - buildings Depreciation expense - plant Doubtful debts expense Entertainment expense Insurance expense 6 000 (45 000) (8 000) (22 500) (3 500) (2 000) (7000) An extract of the company's draft balance sheet at 30 June 2014 showed the following: $ 2 500 $ 21 500 (4 000) 17 500 Assets Cash Accounts receivable less allowance for doubtful debts Inventory Prepaid insurance Plant less Accumulated depreciation Buildings less Accumulated depreciation Land 32 000 4 500 82 500 150 000 (67 500) 170 000 (60 000) 110 000 75 000 Deferred tax assets (net) as at 1 July 2013 4 500 328 500 Liabilities Accounts payable Provision for annual leave 25 000 10 000 140 000 Loan $175 000