Question
On 1 April 2017, Big Dozers Ltd acquired equipment costing $3,250,000. The equipment is depreciated using the straight-line method over a period of five years
On 1 April 2017, Big Dozers Ltd acquired equipment costing $3,250,000. The equipment is depreciated using the straight-line method over a period of five years to a nil residual value. For tax purposes, Inland Revenue permits the entity to depreciate the equipment at a rate of 25% on a straight-line basis. The tax rate is 28%. Big Dozers Ltd reported a profit before tax of $14,000,000 for the financial reporting period ending 31 March 2022.
Tasks
i. Calculate the taxable profit and tax payable for the financial reporting period ending 31 March 2022.
ii. Prepare a journal entry at 31 March 2022 to account for tax in accordance with NZ IAS 12 Income Taxes.
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