BEAR Ltd have the following transactions that have occurred during the 2022 financial year and are looking at the impacts these transactions may have on their deferred tax asset (DTA) and/or deferred tax liability (DTL) accounts. The opening balance of the DTA was $10,000 and the DTL $1,500. Required: You have been asked to provide applicable journal entries (including narrations) for these transactions as well as provide a schedule of temporary differences and calculate any DTAs and/or DTLs and applicable income tax expense.

a. Transaction 1 BEAR Ltd purchased architecturally designed office furniture from Best Designs Pty Ltd in the amount of $280,000 on 1 July 2022. An amount of $90,000 was paid towards this purchase price by using cash reserves of the business. The remainder is being financed by the companys bank. It is estimated that this office furniture will have a useful life of 6 years with no salvage value. The useful life on office furniture from the Australian Taxation Offices perspective is estimated to be 5 years. An expert was asked to value the office furniture at the end of the financial year, as the company believes that the office furniture is now worth much more as the company they purchased from no longer makes these designs. A fair value of the office furniture came in at a valuation of $250,000.

b. Transaction 2 BEAR Ltd has a development costs account in their Balance sheet as at the 30 June 2023 of $245,000. These development costs were claimed as a deduction in the prior financial year.

c. Transaction 3 The provision for annual leave is recorded in the accounts as at 31 May 2023 at $55,000. During the month of June an accrual for Junes entitlement for annual leave totalled $9,000. Employees who took and were paid leave in June amounted to $6,000.

d. Transaction 4 At 30 June 2022 the amount recorded in the Balance sheet for goodwill amounted to $1,200,000. The goodwill was impaired by 10% in 2023 and this needs to be recorded in the financial statements.

e. Transaction 5 BEAR Ltd rents out part of one of their warehouses to Rabbit Pty Ltd. Rabbit paid rent for the next quarter in advance in the amount of $95,000.

f. Advice - BEAR have just reported an accounting profit for the year in their income statement and provided their tax accountant with their financial statements. The tax accountant told BEARs management based on draft income tax return that they have no tax to pay, but the managers are not sure why this would be the case. Explain why BEAR may not have to pay the tax office any tax for profits made this year. Use an example to assist with your explanation.