Question 1 10 Marks Darlinghurst Ltd recorded an accounting profit before income tax of $75,000 for the year ended 30 June 2018 that included the following: Government grant Interest revenue Depreciation of plant equipment Annual leave expense Statutory fine Bad debts expense $18,000 12,000 40,000 25,000 15,000 14,000 Additional information: . No income tax deduction is allowed in relation to the statutory fine. The government grant is not taxable. . Tax depreciation for the plant equipment for the year was $60,000. Interest received in cash during the year was $6,000. Cash payments of $20,000 for annual leave were made during the year. . Total bad debts written off during the year amounted to $5,000. The company income tax rate is 30%. Required (a) Calculate the current tax of Darlinghurst Ltd for the year ended 30 June 2018 and prepare the required tax journal entry. (7 marks) (b) Explain what the parts of the tax journal entry in part (a) above represent in relation to tax-effect accounting. (3 marks) Question 2 10 Marks Rostov Ltd recorded an accounting profit before income tax of $190,000 for the year ended 30 June 2015 that included the following: Depreciation of plant Impairment of goodwill Prepaid insurance expense Annual leave expense Doubtful debts expense Entertainment costs Depreciation of buildings Development costs expense Interest revenue $15,000 6,500 20,000 15,000 27,500 6,000 2,500 10,000 7,000 Additional information: The impairment of goodwill, entertainment costs and depreciation of buildings are not allowed as deductions for income tax. . Interest received in cash during the year was $3,000. Tax depreciation for the plant for the year is $30,000. Total bad debts written off during the year amounted to $17,500. The amount paid for prepaid insurance was $10,000. . The amount paid for annual leave was $9,000. The amount paid for development costs was $32,000. Development costs are recognised as an asset and expensed over time. However, they are immediately deductible for tax purposes based on 125% of the expenditure incurred. The corporate tax rate is 30%. Required Calculate the current tax of Rostov Ltd for the year ended 30 June 2015 and prepare the required tax journal entry