Kingfisher Ltd reported an Accounting Profit before Income Tax Expense of $1,250,000 for the year ended 30 June 2019.

 

Additional Information:

1. On 1 July 2017 Kingfisher Ltd purchased a machine for $2,000,000.  For accounting purposes, the machine is depreciated on a straight-line basis over its useful life of 10 years.  For tax purposes, the machine is eligible to be depreciated on a 20% reducing balance basis.

2. On 1 July 2018, the balance of the Long Service Leave Liability was $800,000.  During the financial year ended 30 June 2019, Kingfisher Ltd provided $150,000 for Long Service Leave, and paid Long Service Leave benefits of $30,000.  For tax purposes, long service leave is deductible when the long service leave is paid.

3. During the year ending 30 June 2019, Kingfisher Ltd incurred development expenditure of $50,000.  For accounting purposes, the development expenditure was capitalised as an asset, and will be amortised on a straight-line basis over the next 5 years.  For tax purposes, the development expenditure is deductible in the year it is incurred.

4. During the year ending 30 June 2019, Kingfisher Ltd incurred entertainment expenses of $10,000.  For tax purposes, entertainment expenses are not tax deductible.

5. The tax rate is 30%.

 

REQUIRED:

1. Calculate taxable income for year ended 30 June 2019.  Show all workings necessary to derive your answer.

2. Determine taxable and deductible temporary differences and associated deferred tax liabilities and deferred tax assets at 30 June 2018 and at 30 June 2019.

3. Prepare the journal entry for Kingfisher Ltd, to account for income tax for the year ending 30 June 2019, in accordance with AASB112: Income Taxes.  Show all workings necessary to derive your answer.