Background information The profit before tax, reported in the statement of comprehensive income of Mexis Ltd for the year ended 30 June amounted to: 162,860,000 2021 Service revenue Prize money Doubtful debts expense Depreciation (Vehicle) Depreciation (Buildings) Maintenance expense Warranties expense Insurance expense Government issued fine 5,089,000 9,160,000 1,017,000 6,616,100 1,628,000 4,580,000 3,053,000 1,526,000 2,544,600 The draft statements of financial position of the company at 30 June 2021 and 2020 showed the following assets and liabilities: 2021 ($) 2020 ($) Assets Cash Inventory Accounts receivable Allowance for doubtful debts Prepaid insurance Vehicle Accumulated depreciation - Vehicle Buildings Accumulated depreciation - Buildings Land 10,687,000 22,902,000 66,161,000 (5,292,000) 2,850,000 66,161,000 (26,464,400) 40,715,000 (16,286,000) 25,446,000 10,178,000 ? 11,705,000 20,866,000 63,108,000 (4,885,000) 2,646,000 66,161,000 (19,848,300) 40,715,000 (14,657,000) 25,446,000 10,178,000 1,511,055 Patents Deferred tax asset Liabilities Accounts payable Provision for maintenance Provision for warranties Service revenue received in advance Deferred tax liability 38,679,000 8,143,000 5,598,000 3,562,000 ? 34,607,000 6,107,000 4,071,000 2,544,000 0 Additional Information: Service revenue is tax assessable when it is received in cash Prize money is not tax assessable Doubtful debts are tax deductible when the company actually incurs bad debts/write off For accounting purpose, the vehicle is depreciated using the annual straight line method at a rate of: For tax purpose, however, the vehicle is depreciated using the annual straight line method at a rate of: Depreciation of buildings is not allowed as tax deductions and patents are not tax assesable Warranties are tax deductible when they are paid in cash to affected customers insurance expense and maintenance expense are tax deductible when paid in cash Government issued fine is not allowed as tax deduction Assume a tax rate for the financial years ending 30 June 2020 and 2021 to be: 10% 15% 30% Required: Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30 June 2021. Prepare a journal entry to recognise the current tax liability/tax loss. Calculate deferred tax asset and deferred tax liability balances as at 30 June 2021. Prepare the deferred tax journal entries for the year ended 30 June 2021. 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 separate columns for: carrying amount, tax base, taxable temporary differences and deductible temporary differences. 27.50% Assume that by 1 December 2021 there was a change in tax rate to: With reference to AASB112 Income Taxes, discuss the accounting treatment of the deferred tax asset and deferred tax liability balances as at 1 December 2021 following a lower tax threshold for the 2021-2022 financial year. Prepare the journal entries to record the effect of change in tax rate. (18+23+ 9 = 50 marks) Background information The profit before tax, reported in the statement of comprehensive income of Mexis Ltd for the year ended 30 June amounted to: 162,860,000 2021 Service revenue Prize money Doubtful debts expense Depreciation (Vehicle) Depreciation (Buildings) Maintenance expense Warranties expense Insurance expense Government issued fine 5,089,000 9,160,000 1,017,000 6,616,100 1,628,000 4,580,000 3,053,000 1,526,000 2,544,600 The draft statements of financial position of the company at 30 June 2021 and 2020 showed the following assets and liabilities: 2021 ($) 2020 ($) Assets Cash Inventory Accounts receivable Allowance for doubtful debts Prepaid insurance Vehicle Accumulated depreciation - Vehicle Buildings Accumulated depreciation - Buildings Land 10,687,000 22,902,000 66,161,000 (5,292,000) 2,850,000 66,161,000 (26,464,400) 40,715,000 (16,286,000) 25,446,000 10,178,000 ? 11,705,000 20,866,000 63,108,000 (4,885,000) 2,646,000 66,161,000 (19,848,300) 40,715,000 (14,657,000) 25,446,000 10,178,000 1,511,055 Patents Deferred tax asset Liabilities Accounts payable Provision for maintenance Provision for warranties Service revenue received in advance Deferred tax liability 38,679,000 8,143,000 5,598,000 3,562,000 ? 34,607,000 6,107,000 4,071,000 2,544,000 0 Additional Information: Service revenue is tax assessable when it is received in cash Prize money is not tax assessable Doubtful debts are tax deductible when the company actually incurs bad debts/write off For accounting purpose, the vehicle is depreciated using the annual straight line method at a rate of: For tax purpose, however, the vehicle is depreciated using the annual straight line method at a rate of: Depreciation of buildings is not allowed as tax deductions and patents are not tax assesable Warranties are tax deductible when they are paid in cash to affected customers insurance expense and maintenance expense are tax deductible when paid in cash Government issued fine is not allowed as tax deduction Assume a tax rate for the financial years ending 30 June 2020 and 2021 to be: 10% 15% 30% Required: Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30 June 2021. Prepare a journal entry to recognise the current tax liability/tax loss. Calculate deferred tax asset and deferred tax liability balances as at 30 June 2021. Prepare the deferred tax journal entries for the year ended 30 June 2021. 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 separate columns for: carrying amount, tax base, taxable temporary differences and deductible temporary differences. 27.50% Assume that by 1 December 2021 there was a change in tax rate to: With reference to AASB112 Income Taxes, discuss the accounting treatment of the deferred tax asset and deferred tax liability balances as at 1 December 2021 following a lower tax threshold for the 2021-2022 financial year. Prepare the journal entries to record the effect of change in tax rate. (18+23+ 9 = 50 marks)