Question 14 Accounting for Income Tax Not yet answered REF No. 65 Marked out of 30.00 The accounting profit before tax of Magoo Ltd for the year ended 30 June 20x2 was $149,000. It included the following revenue and expense items: Government grant (non-taxable exempt income) 5,800 P Flag question 4,000 Entertainment expense (non-deductible) Long-service leave expense 4,100 Doubtful debts expense 4,100 16,400 Depreciation expense - plant Depreciation expense - motor vehicles 18,750 Proceeds from sale of motor vehicles 19,000 Carrying amount of motor vehicles sold 5,500 Insurance expense 6,900 Rent revenue 8,000 Interest revenue 4,200 Impairment of goodwill 5,000 The draft statement of financial position as at 30 June 20X2 included the following assets and liabilities: 20X2 20X1 Cash $6,000 $7,000 Accounts receivable 41,000 45,300 The draft statement of financial position as at 30 June 20X2 included the following assets and liabilities: 20X2 20X1 Cash $6,000 $7,000 Accounts receivable 41,000 45,300 Allowance for doubtful debts (5,100) (2,700 Inventories 51,000 45,500 Rent receivable 1,300 2,500 Prepaid insurance 5,300 6,000 Plant 164,000 164,000 Accumulated depreciation - plant (65,600) (49,200) Motor vehicles 64,000 75,000 Accumulated depreciation - motor vehicles (50,750 (37,500) Goodwill 15,000 15,000 Accumulated impairment - goodwill (5,000) (0) Accounts payable 52,000 53,000 Provision for long service leave 10,300 10,900 Interest received in advance 14,000 11,700 Deferred tax liability 2 8,400 Deferred tax asset 3,600 Additional information The tax depreciation rate for plant is 15%, while the accounting depreciation rate was 10%. Additional information The tax depreciation rate for plant is 15%, while the accounting depreciation rate was 10%. The tax depreciation rate for motor vehicles was 20%, while the accounting depreciation rate was 25%. Motor vehicles originally purchased on 1 July 20X0 were sold on 30 June 20x2. This sale was the only movement in the motor vehicles account over the time period covered by this question. The tax rate is 30%. The company has $10,000 in tax losses carried forward from the previous year. A deferred tax asset has been recognised for these losses. Taxation legislation allows such losses to be offset against future taxable profit. REQUIRED: Round all your answers to the nearest dollar amount. If your calculated answer had decimal places, then round to the nearest whole number, e.g., 1.49 should be written as 1 and 1.50 should be written as 2. If you believe no journal entry is required, select NULL for the account name, NA for the Dr or Cr, and enter 0 for the amount. Do not leave the amount blank. Do not enter dollar ($) signs or commas (i.e. enter 10000 not $10,000). (i) Complete the current tax worksheet below. Determine the taxable profit for the year ended 30 June 20X2, starting from the accounting profit before tax and showing the adjustments for differences between taxation and accounting rules. NB: Values to be added to accounting profit before tax should be entered as positive values without the " +" sign. Values to be subtracted from accounting profit before tax should be entered as negative values with the "-" sign (e.g., -100 for negative 100). The same logic applies to any adjustment for exempt income and recoupment of tax losses. If you believe no adjustment should be made for a particular line item, you must enter 0 for the amount. Do not leave any input boxes blank. Accounting profit before tax 149000l Government grant $ Entertainment expense Doubtful debts expense Doubtful debts written off Depreciation expense - Plant Tax depreciation - Plant Depreciation expense - Motor vehicles Tax depreciation - Motor vehicles Proceeds from sale of motor vehicles Carrying amount of motor vehicles sold Tax carrying amount of motor vehicles sold Insurance expense Insurance paid Rent revenue Rent received Interest revenue Interest received in advance Long service leave expense Long service leave paid Impairment of goodwill Goodwill impairment tax deduction Taxable income Exempt income Taxable income adjusted for exempt income Recoupment of tax loss Taxable income adjusted for recoupment of tax loss Current tax liability (ii) Complete the deferred tax worksheet below to determine the movements in the deferred tax accounts for the year ended 30 June 20x2. NB: You must enter a number into every input box in the following worksheet. If you believe no entry is required, or that the value should be zero, then you should input a value of zero (0). Failure to do so will result in a loss of marks. For this worksheet all numbers must be entered as positive values regardless of whether you should add or subtract the amount when performing calculations using that value (i.e., do not enter negative sign for any of your numbers). The "sign" of the final adjustment to the DTA and DTL accounts you calculate in the worksheet below should be indicated by entering either DR or CR in the last two cells of the table. (Note: no dropdown is provided for these values, you must type in either DR or CR.) CA FTA FDA TB TTD DTD Cash Accounts receivable Inventory Rent receivable Prepaid insurance $ Plant Motor vehicles Goodwill Accounts payable Provision for LSL Interest received in Jadvance Temporary differences Excluded differences Net temporary differences DTL DTA Beginning Beginning balances Tax effect of loss carried forward Adjustment to DTL and DTA Indicate if Adjustment is DR or CR Abbreviations used in the table: CA = Carrying amount FTA = Future taxable amount FDA = Future deductible amount TB = Tax base TTD = Taxable temporary differences DTD = Deductible temporary differences DTL = Deferred tax liability DTA = Deferred tax asset Question 14 Accounting for Income Tax Not yet answered REF No. 65 Marked out of 30.00 The accounting profit before tax of Magoo Ltd for the year ended 30 June 20x2 was $149,000. It included the following revenue and expense items: Government grant (non-taxable exempt income) 5,800 P Flag question 4,000 Entertainment expense (non-deductible) Long-service leave expense 4,100 Doubtful debts expense 4,100 16,400 Depreciation expense - plant Depreciation expense - motor vehicles 18,750 Proceeds from sale of motor vehicles 19,000 Carrying amount of motor vehicles sold 5,500 Insurance expense 6,900 Rent revenue 8,000 Interest revenue 4,200 Impairment of goodwill 5,000 The draft statement of financial position as at 30 June 20X2 included the following assets and liabilities: 20X2 20X1 Cash $6,000 $7,000 Accounts receivable 41,000 45,300 The draft statement of financial position as at 30 June 20X2 included the following assets and liabilities: 20X2 20X1 Cash $6,000 $7,000 Accounts receivable 41,000 45,300 Allowance for doubtful debts (5,100) (2,700 Inventories 51,000 45,500 Rent receivable 1,300 2,500 Prepaid insurance 5,300 6,000 Plant 164,000 164,000 Accumulated depreciation - plant (65,600) (49,200) Motor vehicles 64,000 75,000 Accumulated depreciation - motor vehicles (50,750 (37,500) Goodwill 15,000 15,000 Accumulated impairment - goodwill (5,000) (0) Accounts payable 52,000 53,000 Provision for long service leave 10,300 10,900 Interest received in advance 14,000 11,700 Deferred tax liability 2 8,400 Deferred tax asset 3,600 Additional information The tax depreciation rate for plant is 15%, while the accounting depreciation rate was 10%. Additional information The tax depreciation rate for plant is 15%, while the accounting depreciation rate was 10%. The tax depreciation rate for motor vehicles was 20%, while the accounting depreciation rate was 25%. Motor vehicles originally purchased on 1 July 20X0 were sold on 30 June 20x2. This sale was the only movement in the motor vehicles account over the time period covered by this question. The tax rate is 30%. The company has $10,000 in tax losses carried forward from the previous year. A deferred tax asset has been recognised for these losses. Taxation legislation allows such losses to be offset against future taxable profit. REQUIRED: Round all your answers to the nearest dollar amount. If your calculated answer had decimal places, then round to the nearest whole number, e.g., 1.49 should be written as 1 and 1.50 should be written as 2. If you believe no journal entry is required, select NULL for the account name, NA for the Dr or Cr, and enter 0 for the amount. Do not leave the amount blank. Do not enter dollar ($) signs or commas (i.e. enter 10000 not $10,000). (i) Complete the current tax worksheet below. Determine the taxable profit for the year ended 30 June 20X2, starting from the accounting profit before tax and showing the adjustments for differences between taxation and accounting rules. NB: Values to be added to accounting profit before tax should be entered as positive values without the " +" sign. Values to be subtracted from accounting profit before tax should be entered as negative values with the "-" sign (e.g., -100 for negative 100). The same logic applies to any adjustment for exempt income and recoupment of tax losses. If you believe no adjustment should be made for a particular line item, you must enter 0 for the amount. Do not leave any input boxes blank. Accounting profit before tax 149000l Government grant $ Entertainment expense Doubtful debts expense Doubtful debts written off Depreciation expense - Plant Tax depreciation - Plant Depreciation expense - Motor vehicles Tax depreciation - Motor vehicles Proceeds from sale of motor vehicles Carrying amount of motor vehicles sold Tax carrying amount of motor vehicles sold Insurance expense Insurance paid Rent revenue Rent received Interest revenue Interest received in advance Long service leave expense Long service leave paid Impairment of goodwill Goodwill impairment tax deduction Taxable income Exempt income Taxable income adjusted for exempt income Recoupment of tax loss Taxable income adjusted for recoupment of tax loss Current tax liability (ii) Complete the deferred tax worksheet below to determine the movements in the deferred tax accounts for the year ended 30 June 20x2. NB: You must enter a number into every input box in the following worksheet. If you believe no entry is required, or that the value should be zero, then you should input a value of zero (0). Failure to do so will result in a loss of marks. For this worksheet all numbers must be entered as positive values regardless of whether you should add or subtract the amount when performing calculations using that value (i.e., do not enter negative sign for any of your numbers). The "sign" of the final adjustment to the DTA and DTL accounts you calculate in the worksheet below should be indicated by entering either DR or CR in the last two cells of the table. (Note: no dropdown is provided for these values, you must type in either DR or CR.) CA FTA FDA TB TTD DTD Cash Accounts receivable Inventory Rent receivable Prepaid insurance $ Plant Motor vehicles Goodwill Accounts payable Provision for LSL Interest received in Jadvance Temporary differences Excluded differences Net temporary differences DTL DTA Beginning Beginning balances Tax effect of loss carried forward Adjustment to DTL and DTA Indicate if Adjustment is DR or CR Abbreviations used in the table: CA = Carrying amount FTA = Future taxable amount FDA = Future deductible amount TB = Tax base TTD = Taxable temporary differences DTD = Deductible temporary differences DTL = Deferred tax liability DTA = Deferred tax asset