Background Information $17,160,000 PARTA The profit before tax, as reported in the statement of comprehensive income of SuperX Ltd (an Australian retail company) for the year ended 30 June 2019 amounted to: including the following revenue and expense items: Subscrption revenue Government Award Income Doubtful debts expense Depreciation (Equipment) Depreciation (Buildings) Maintenance Expense Employee benefits expense Rent expense Entertainment Expense 536,000 965,000 107,000 697,000 171,000 482,000 321,000 160,000 268,000 The draft statements of financial position of the company at 30 June 2019 and 2018 showed the following assets and liablities: 2019 ($) 2018 ($) Assets Cash Inventory Accounts Recievable Allowaancew for doubtful debts Prepaid rent Equipment Accumulated depreciation - Equipment Buildings Accumulated depreciation - Buildings Land Goodwill (net) Defferred tax asset $1,126,000 $1,233,000 $2,413,000 $2,198,000 $6,971,000 $6,649,000 -$557,000 $514,000 $300,000 $278,000 $6,971,000 $6,971,000 -$2,788,400 -$2,091,300 $4,290,000 $4,290,000 -$1,716,000 -$1,544,000 $2,681,000 $2,681,000 $1,072,000 $1,072,000 $159,105 Liabilities Accounts Paybale Provision for maintenance Provision for employee benefits Subscrption received in advance Deferred tax ability 2019 ($) 2018 )$) $4,075,000 $3,646,000 $858,000 $643,000 $589,000 $429,000 $375,000 $268,000 Additional Information: a) Subscrption revenue is tax assesable when its received in cash b) Government award income is not tax assesable c) Doubtful debts are tax deductible when the company actually incurs bad debts/write off d) For accounting purpose, the equipment is depreciated using the straight line method at a rate of: 10% per annum For tax purpose, however, the equipment is depreciated on: 15% per annum e) Depreciation of buildings is not allowed as tax deductions f) Employee benefits are tax deductible when they are paid in cash to the employees g) Rent expense and maintenance expense are tax deductible when paid in cash h) Entertainment expense is not allowed as tax deduction 1) Assume a tax rate of 30% for the financial years ending 30 June 2018 and 2019 Required: 1) Calculate the taxable income/tax loss and the current tax liability (if any) for the fiancial year ended 30th June 2019. Prepare a journal entry to recognise the current tax liability /tax loss. 2) Calculate the deferred tax asset and deferred tax liability balances as at 30th June 2019. Prepare the deferred tax journal entries for the year ended 30th June 2019. Note that you are NOT required to prepare journals to offset the deferred tax asset and deferred tax liability balances. Show your calculation using deferred tax worksheets by creating seperate column for carrying amount, tax base, taxable temporary differences and deductible temporary differnces. 3) Justify your treatment of the following accounts is the current tax worksheet. If relevant, explain how and why this leads to the deferred tax consequence shown in the deferred tax worksheet. i) Subscrption Revenue (7 marks), ii) Rent Expense (6 marks), iii) Maintenance expense (3 marks) CALCULATING TAXABLE INCOME 1) Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30th June 2019. Prepare a journal entry to recognise the current Note: Students are allowed to use either T ledgers or equations to show their workings Workings: Journal entry: 7 marks Calculating DTA/DTL 2019 2) Calculate deferred tax asset and deferred tax liability balances as at 30th June 2019. Prepare the deferred tax journal entries for the year ended 30th June 2019. Accounts TTD Journal entry: 6 marks Discussion Question 3) Insert your answer below: 3 marks Background Information $17,160,000 PARTA The profit before tax, as reported in the statement of comprehensive income of SuperX Ltd (an Australian retail company) for the year ended 30 June 2019 amounted to: including the following revenue and expense items: Subscrption revenue Government Award Income Doubtful debts expense Depreciation (Equipment) Depreciation (Buildings) Maintenance Expense Employee benefits expense Rent expense Entertainment Expense 536,000 965,000 107,000 697,000 171,000 482,000 321,000 160,000 268,000 The draft statements of financial position of the company at 30 June 2019 and 2018 showed the following assets and liablities: 2019 ($) 2018 ($) Assets Cash Inventory Accounts Recievable Allowaancew for doubtful debts Prepaid rent Equipment Accumulated depreciation - Equipment Buildings Accumulated depreciation - Buildings Land Goodwill (net) Defferred tax asset $1,126,000 $1,233,000 $2,413,000 $2,198,000 $6,971,000 $6,649,000 -$557,000 $514,000 $300,000 $278,000 $6,971,000 $6,971,000 -$2,788,400 -$2,091,300 $4,290,000 $4,290,000 -$1,716,000 -$1,544,000 $2,681,000 $2,681,000 $1,072,000 $1,072,000 $159,105 Liabilities Accounts Paybale Provision for maintenance Provision for employee benefits Subscrption received in advance Deferred tax ability 2019 ($) 2018 )$) $4,075,000 $3,646,000 $858,000 $643,000 $589,000 $429,000 $375,000 $268,000 Additional Information: a) Subscrption revenue is tax assesable when its received in cash b) Government award income is not tax assesable c) Doubtful debts are tax deductible when the company actually incurs bad debts/write off d) For accounting purpose, the equipment is depreciated using the straight line method at a rate of: 10% per annum For tax purpose, however, the equipment is depreciated on: 15% per annum e) Depreciation of buildings is not allowed as tax deductions f) Employee benefits are tax deductible when they are paid in cash to the employees g) Rent expense and maintenance expense are tax deductible when paid in cash h) Entertainment expense is not allowed as tax deduction 1) Assume a tax rate of 30% for the financial years ending 30 June 2018 and 2019 Required: 1) Calculate the taxable income/tax loss and the current tax liability (if any) for the fiancial year ended 30th June 2019. Prepare a journal entry to recognise the current tax liability /tax loss. 2) Calculate the deferred tax asset and deferred tax liability balances as at 30th June 2019. Prepare the deferred tax journal entries for the year ended 30th June 2019. Note that you are NOT required to prepare journals to offset the deferred tax asset and deferred tax liability balances. Show your calculation using deferred tax worksheets by creating seperate column for carrying amount, tax base, taxable temporary differences and deductible temporary differnces. 3) Justify your treatment of the following accounts is the current tax worksheet. If relevant, explain how and why this leads to the deferred tax consequence shown in the deferred tax worksheet. i) Subscrption Revenue (7 marks), ii) Rent Expense (6 marks), iii) Maintenance expense (3 marks) CALCULATING TAXABLE INCOME 1) Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30th June 2019. Prepare a journal entry to recognise the current Note: Students are allowed to use either T ledgers or equations to show their workings Workings: Journal entry: 7 marks Calculating DTA/DTL 2019 2) Calculate deferred tax asset and deferred tax liability balances as at 30th June 2019. Prepare the deferred tax journal entries for the year ended 30th June 2019. Accounts TTD Journal entry: 6 marks Discussion Question 3) Insert your answer below: 3 marks