Frog Ltd has prepared its draft statement of profit or loss and other comprehensive income and statement of financial position on 30 June 2015. The statements are prepared before considering taxation. The following information is available:

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Question 2 [15 marks] Accounting for income tax F Ltd has prepared its draft statement of profit or loss and other comprehensive income and statement of financial position on 30 June 2015. The statements are prepared before considering taxation. The following information is available: Extract from statement of profit or loss and other comprehensive income for the year ended 30 June 2015 $ Gross profit Other income: Rent revenue Royalty revenue (exempt from income tax) Proceeds from sale of plant Expenses: Administration expenses Doubtful debts expense Salaries Rent Annual leave Entertainment expenses (not tax deductible) Warranty expenses Carrying amount of plant sold Depreciation expense - plant Depreciation expense - motor vehicles Insurance Accounting profit before tax $ 758,000 14,000 5,000 29,000 116,500 4,000 270,200 26,000 13,500 2,000 12,000 40,000 14,000 8,000 10,400 (516,600) 289,400 Assets and liabilities as disclosed in the Statement of Financial Position as at 30 June 2015 2015 $ Assets: Cash Inventory Accounts receivable Less Allowance for doubtful debts Rent receivable Prepaid insurance Plant - cost Less Accumulated depreciation Motor vehicles - cost Less Accumulated depreciation Deferred tax asset Liabilities: Accounts payable Provision for annual leave Provision for warranties Current tax liability Deferred tax liability Loan payable 2014 $ 196,500 210,000 76,000 (8,600) 2,000 1,200 70,000 (46,000) 32,000 (20,500) ? 7,000 85,000 34,000 (5,000) 3,000 500 120,000 (42,000) 32,000 (12,500) 17,160 17,300 16,200 21,500 ? ? 20,000 12,800 23,000 18,700 32,600 2,925 30,000 COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969. This material has been reproduced and communicated to you by or on behalf of Melbourne Institute of Technology pursuant to Part VB of the Copyright Act 1968 (The Act). The material in this communication may be subject to copyright under the Act. Any further copying or communication of this material by you may be the subject of copyright protection under the Act. 1 Additional information: All administration, rent and salaries expenses incurred have been paid as at year end. Tax deductions for annual leave, warranties, insurance and rent are available when the amounts are paid, and not as amounts are accrued. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. Rent income is taxed when amounts are received, and not as amounts are accrued. The company can claim a tax deduction of $10,500 for depreciation on plant, and $12,000 for depreciation on motor vehicles. Accumulated depreciation for tax purposes at 30 June 2014 was $31,500 for plant, and $18,750 for motor vehicles. The plant sold during the year (sold on 1 July 2014) had been purchased for $50,000 on 1 July 2013. For taxation purposes, the plant was depreciated at 15% p.a. The tax rate is 30%. Required: i) Determine the balance of any current and deferred tax assets and liabilities as at 30 June 2015, in accordance with AASB 112. (13 marks) ii) Prepare the journal entries to record the current tax liability and movement in the deferred tax assets and deferred tax liabilities. (2 marks) Marking Guide - Question 2 Determination of taxable income and current tax liability Determination of deferred tax assets and liabilities using a deferred tax worksheet Journal entries Max. marks awarded 6 7 2 COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969. This material has been reproduced and communicated to you by or on behalf of Melbourne Institute of Technology pursuant to Part VB of the Copyright Act 1968 (The Act). The material in this communication may be subject to copyright under the Act. Any further copying or communication of this material by you may be the subject of copyright protection under the Act. 2