Pg. 505 Ex 12.17 Calculation of current tax liability and adjusting journal entry The profit before tax, as reported in the statement of profit or loss and other comprehensive income of Mackay Ltd for the year ended 30 June 2021, amounted to $60000, including the following revenue and expense items. Rent revenue Bad debts expense Depreciation expense plant Annual leave expense Entertainment costs (non-deductible) $3000 6000 5000 3000 1800 800 The statement of financial position of the company at 30 June 2021 showed the following assets and liabilities. 2021 2020 Assets $8000 $8500 15500 48 000 4000) 2 200 50000 (21000) 30000 (14000) 7 000 4 050 17000 50000 (5500) 2500 50000 Allowance for doubtful debts Office supplies Buildings Accumulated depreciation- buildings Goodwill (net) Deferred tax asset 26000) 30000 (14800) 7000 2021 2020 Liabilities Accounts payable Provision for long service leave Provision for annual leave Rent received in advance Deferred tax liability 29 000 6000 4000 2500 26000 4500 3000 2000 3150 Additional information In November 2019, the company received an amended assessment for the year ended 30 June 2019 from the tax authority. The amendment notice indicated that an amount of $4500 claimed as a deduction had been disallowed. Nebo Ltd has not yet adjusted its accounts to reflect the For tax purposes, the carrying amount of plant sold was $26000. This sale was the only movement in plant for the year The tax deduction for plant depreciation was $28 800. Accumulated depreciation at 30 June 2019 for taxation purposes was $156480. In the previous year, Nebo Ltd had made a tax loss of $18 400. Nebo Ltd recognised a deferred tax asset in respect of this loss. * The tax rate is 30% Required 1. Prepare the journal entry necessary to record the amendment to the prior year's taxation 2 Prepare the current tax worksheet and journal entry/entries to calculate and record the current 3. Justify your treatment of annual leave expense in the current tax worksheet. return. tax for the year ended 30 June 2020. 4. Calculate the temporary difference as at 30 June 2020 for each of the following assets. Explain how these differences arise and why you have classified them as either deductible temporary differences or taxable temporary differences: (a) plant (b) accounts receivable. Pg. 505 Ex 12.17 Calculation of current tax liability and adjusting journal entry The profit before tax, as reported in the statement of profit or loss and other comprehensive income of Mackay Ltd for the year ended 30 June 2021, amounted to $60000, including the following revenue and expense items. Rent revenue Bad debts expense Depreciation expense plant Annual leave expense Entertainment costs (non-deductible) $3000 6000 5000 3000 1800 800 The statement of financial position of the company at 30 June 2021 showed the following assets and liabilities. 2021 2020 Assets $8000 $8500 15500 48 000 4000) 2 200 50000 (21000) 30000 (14000) 7 000 4 050 17000 50000 (5500) 2500 50000 Allowance for doubtful debts Office supplies Buildings Accumulated depreciation- buildings Goodwill (net) Deferred tax asset 26000) 30000 (14800) 7000 2021 2020 Liabilities Accounts payable Provision for long service leave Provision for annual leave Rent received in advance Deferred tax liability 29 000 6000 4000 2500 26000 4500 3000 2000 3150 Additional information In November 2019, the company received an amended assessment for the year ended 30 June 2019 from the tax authority. The amendment notice indicated that an amount of $4500 claimed as a deduction had been disallowed. Nebo Ltd has not yet adjusted its accounts to reflect the For tax purposes, the carrying amount of plant sold was $26000. This sale was the only movement in plant for the year The tax deduction for plant depreciation was $28 800. Accumulated depreciation at 30 June 2019 for taxation purposes was $156480. In the previous year, Nebo Ltd had made a tax loss of $18 400. Nebo Ltd recognised a deferred tax asset in respect of this loss. * The tax rate is 30% Required 1. Prepare the journal entry necessary to record the amendment to the prior year's taxation 2 Prepare the current tax worksheet and journal entry/entries to calculate and record the current 3. Justify your treatment of annual leave expense in the current tax worksheet. return. tax for the year ended 30 June 2020. 4. Calculate the temporary difference as at 30 June 2020 for each of the following assets. Explain how these differences arise and why you have classified them as either deductible temporary differences or taxable temporary differences: (a) plant (b) accounts receivable