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Plantation Ltd commenced business on 1 July 202 2 with share capital of $562 000. The company purchased some non-current assets on that date. The

Plantation Ltd commenced business on 1 July 2022 with share capital of $562 000. The company purchased some non-current assets on that date. The details of the non-current asset purchases are as follows:

Machinery

Vehicles

Cost

$400 000

$75 000

Depreciation rate:

Accounting

20%

25%

Tax

15%

50%

Method

Straight line

Straight line

The statement of comprehensive income and statement of financial position for Plantation Ltd at year end were as follows:

Plantation Ltd

Statement of Comprehensive Income

for the year ended 30 June 2023

$

$

Revenues

500 000

Expenses

Cost of sales

175 000

Depreciation on machinery

80 000

Depreciation on vehicles

18 750

Salaries and wages

125 000

Insurance

10 000

Annual leave

14 000

Rent of premises

20 000

Other expenses

17 250

460 000

Profit before income tax

40 000

Plantation Ltd

Statement of Financial Position

as at 30 June 2023

Assets

$

$

Cash

50 000

Inventory

150 000

Accounts receivable

80 000

Prepaid insurance

20 000

Machinery

400 000

Less: Accumulated depreciation

80 000

320 000

Vehicles

75 000

Less: Accumulated depreciation

18 750

56 250

676 250

Liabilities

Accounts payable

50 250

Rent payable

10 000

Provision for annual leave

14 000

74 250

Net assets

602 000

Shareholders equity

Share capital

562 000

Retained earnings

40 000

602 000

Required Calculation Questions

1. Calculate the current tax liability for the year ended 30 June 2023.
2. Complete a worksheet showing the deferred tax balances for the year ended 30 June 2023.
3. Complete the relevant general journal entries to record deferred tax assets and liabilities at 30 June 2023.
4. Prepare an extract from the statement of comprehensive income showing profit before tax, income tax expense and profit after tax for the year ended 30 June 2023. Prepare an extract from the statement of financial position showing any income tax assets and liabilities at30 June 2023.
5. Tax rate is 30%.

Written Questions

6. Are all differences that exist at the end of the reporting period between the carrying amount and tax bases of assets and liabilities recognised as part of deferred tax assets or deferred tax liabilities? Explain.
7. Despite the fact that deferred tax liabilities and assets are recognised in respect of certain assets and liabilities, the income tax expense (or revenue) of such items is always recognised in the current year. Discuss if this statement is true and provide reasons for your choice.

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