Great Ltd acquired an item of plant on 1 January 2020 for $80,000. The useful life of the plant is estimated to be 4 years and depreciated using the straight-line method. The tax authority allows for tax deduction at 20% per annum. Great Ltd prepares financial statements on 30 June each year and the tax rate applicable is 30%.

Prepare journal entries to account for income tax on:

a. 30 June 2022.

b. 30 June 2024. Provide all workings.

Answers:

a. Journal entry on 30 June 2022

Dr	Deferred tax asset	1,200
Cr	Income tax expense/income		1,200
	(recognize DTA for plant)

b. Journal entry on 30 June 2024

Dr	Income tax expense/income	1,800
Cr	Deferred tax asset		1,800
	(recognize DTA for plant)

Can you provide a more detailed answer? I can't understand this simplified answer.