Question
Big Construction Ltd has requested that you prepare the tax-effect accounting information for the year ended 30 June 2023. The following has been extracted from
Big Construction Ltd has requested that you prepare the tax-effect accounting information for the year ended 30 June 2023. The following has been extracted from their internal reports: - Accounting profit before tax for the year................................................... $950,000 - Expenses brought to account included: Depreciation plant................................................................................... $93,000 None-deductable Fine...................................................................................$1,000 Impairment loss on goodwill....................................................................... $11,000 Long service leave...................................................................................... $16,000 - Accumulated depreciation on plant for tax purposes was $130,000 on 30 June 2022 and $250,000 on 30 June 2023. There were no additions or disposals of plant during the year. - Bad debts of $16,000 were written off during the year against the Allowance for Doubtful Debts. - On 1 March 2023 the company income tax rate was increased from 30% to 35%, effective for the 2022/2023 tax year and onwards. The deferred tax opening balances on 1 July 2022 were: Deferred Tax Asset (based on DTD of $ 85,000)......................... $ 25,500 Deferred Tax Liability (based on TTD of $ 65,000)...................... $ 19,500 (DTD: deductible temporary differences; TTD: taxable temporary differences) - Reporting date is 30 June.
Relevant assets and liabilities as disclosed in the Balance Sheet as at 30 June 2023 were: Assets Accounts Receivable............................................................... $328,000 Less: Allowance for Doubtful Debts [2022 $11,000]................ 15,000 $313,000 Inventory............................................................................................................ 286,000 Plant cost.................................................................................. $800,000 Less: Accumulated Depreciation Plant.................................... 175,000 625,000 Liabilities Accounts Payable............................................................................................... $205,000 Provision for long-service leave................... [2022 $57,000]........................ 59,000
Required: (i) Prepare the tax worksheet (the tax work sheet is attached: ACCT3007_Autumn_2023_Quiz Two Tax Worksheet.docx); please copy and paste the tax worksheet to the textbox)
(ii) The journal entries for: the current and deferred tax consequences; and the disclosure of deferred tax in the balance sheet. (Narrations are required
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