Question
Basin Ltds statement of profit or loss for the year ended 30 June 2021 and extracts from its statements of financial position as at 30
Basin Ltds statement of profit or loss for the year ended 30 June 2021 and extracts from its
statements of financial position as at 30 June 2021 and 30 June 2020 are shown below. The
statements for the current year are yet to be finalised by accounting for income tax.
Basin Ltd
Statement of Profit or Loss
for the year ending 30 June 2021
Income
Service revenue $ 900 000
Rent revenue 50 000
Insurance claim for loss of profits 41 200 991 200
Less: Expenses
Employee expenses 660 000
Insurance expense 50 000
Accounting fees 5 500
Bad and doubtful debts 19 500
Cleaning and maintenance 3 250
Depreciation of equipment 5 500
Entertainment expenses 4 000
Interest on borrowings 75 000
Legal fees 3 800
Motor vehicle expenses 6 000
Other 3 750
Restructuring costs 23 000 859 300
Profit before tax $ 131 900
2
Basin Ltd
Statement of Financial Position (Extract)
as at 30 June
2021 2020
Assets
Cash at bank $ 900 100 $ 800 100
Trade debtors 240 550 200 000
Allowance for doubtful debts (38 000) (20 000)
Prepaid insurance 10 950 5 000
Land at fair value 450 000 300 000
Equipment at cost 58 000 58 000
Accumulated depreciation (24 500) (19 000)
Other debtors 142 400
Deferred tax asset ? 18 000
Liabilities
Trade creditors 239 000 245 000
Borrowings 543 800 438 500
Unearned rent revenue 50 000
Provision for employee benefits 49 500 40 000
Provision for restructuring 23 000
Other creditors 10 000
Current tax liability 13 300
Deferred tax liability ? 32 700
Additional information
(a)The original cost of the land is $200 000.
(b)The tax written down value of equipment at 30 June 2021 is $28 000 (2020: $35 000). During
the 2021 year, there were no additions or disposals of equipment.
(c)Legal fees of $3800 are capital in nature and non-deductible for tax purposes.
(d)Other creditors at 30 June 2021 include an accrual for accounting fees of $4500 for work not
yet performed (2020: $Nil). For tax purposes, the accounting fees are deductible only if work
has been performed.
(e) For tax purposes, restructuring costs are deductible only when paid.
(f) Other debtors at 30 June 2021 include $41 200 relating to an insurance claim that is inprocess. Insurance income is only assessable for tax purposes after the insurance proceeds
have been received.
(g)The corporate tax rate is 30%.
Required:
i. Prepare the current tax worksheet for the year ending 30 June 2021 and the current tax entries
for the year.
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