Background information The profit before tax, reported in the statement of comprehensive incme of Luckmore Ltd for the year ended 30 June amounted to: 8,490,000 2020 Service revenue Prize money Doubtful debts expense Depreciation (Vehicle) Depreciation (Buildings) Maintenance expense Warranties expense Insurance expense Government issued fine 265,000 477,000 53,000 517,350 84,000 238,000 159,000 79,000 132,600 The draft statements of financial position of the company at 30 June 2020 and 2019 showed the following assets and liabilities: 2020 ($) 2019 ($) Assets Cash 557,000 610,000 Inventory 1,193,000 1,087,000 Accounts receivable 3,449,000 3,289,000 Allowance for doubtful debts (275,000) (254,000) Prepaid insurance 148,000 137,000 Vehicle 3,449,000 3,449,000 Accumulated depreciation - Vehicle (2,069,400) (1,552,050) Buildings 2,122,000 2,122,000 Accumulated depreciation - Buildings (849,000) (764,000) Land 1,326,000 1,326,000 Patents 530,000 530,000 Deferred tax asset ? 78,495 Liabilities Accounts payable Provision for maintenance Provision for warranties Service revenue received in advance Deferred tax liability 2,016,000 424,000 291,000 185,000 ? 1,804,000 318,000 212,000 132,000 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 2019 and 2020 to be: 15% 20% 30% Required: Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30 June 2020. Prepare a journal entry to recognise the current tax liability/tax loss. Background information The profit before tax, reported in the statement of comprehensive incme of Luckmore Ltd for the year ended 30 June amounted to: 8,490,000 2020 Service revenue Prize money Doubtful debts expense Depreciation (Vehicle) Depreciation (Buildings) Maintenance expense Warranties expense Insurance expense Government issued fine 265,000 477,000 53,000 517,350 84,000 238,000 159,000 79,000 132,600 The draft statements of financial position of the company at 30 June 2020 and 2019 showed the following assets and liabilities: 2020 ($) 2019 ($) Assets Cash 557,000 610,000 Inventory 1,193,000 1,087,000 Accounts receivable 3,449,000 3,289,000 Allowance for doubtful debts (275,000) (254,000) Prepaid insurance 148,000 137,000 Vehicle 3,449,000 3,449,000 Accumulated depreciation - Vehicle (2,069,400) (1,552,050) Buildings 2,122,000 2,122,000 Accumulated depreciation - Buildings (849,000) (764,000) Land 1,326,000 1,326,000 Patents 530,000 530,000 Deferred tax asset ? 78,495 Liabilities Accounts payable Provision for maintenance Provision for warranties Service revenue received in advance Deferred tax liability 2,016,000 424,000 291,000 185,000 ? 1,804,000 318,000 212,000 132,000 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 2019 and 2020 to be: 15% 20% 30% Required: Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30 June 2020. Prepare a journal entry to recognise the current tax liability/tax loss