Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For the year ending 30/06/2016 Aladdin Ltd. has made an accounting profit before tax in amount of $410,000. The following relevant transactions occurred: The balance

For the year ending 30/06/2016 Aladdin Ltd. has made an accounting profit before tax in amount of $410,000. The following relevant transactions occurred:
The balance of Accounts Receivable at year-end was $300,000 less an associated allowance for doubtful debts in amount of $60,000. During the year, $40,000 worth of bad debts have been written off, while the Bad debt expense for the year was $80,000. For tax purposes, bad debts are recognised when written off.
The company purchased a piece of equipment on 1/7/2014 for $200,000 with a useful life of four years, depreciated on straight-line basis. For tax purposes, the equipment is depreciated over two years.
The company has service revenue received in advance in amount of $200,000 for services expected to be provided in 2017. Assume revenue is taxable when cash is received.
 The following information are also provided:
o Company tax rate = 30%
o Opening balance of DTA = $6,000
o Opening balance of DTL = $10,000


Given all these information, please calculate the taxable income, DTA, and DTL.

Step by Step Solution

3.31 Rating (166 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the taxable income deferred tax assets DTA and deferred tax liabilities DTL we need to consider the differences between accounting profit ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

More Books

Students also viewed these Accounting questions