Question 2 20 Marks Robinson Ltd commences operations on 1 July 2019 and presents its first statement of comprehensive income and first statement of financial position on 30 June 2020. The following information is available: Statement of Comprehensive Income for the year ended 30 June 2020 [Extract] 2,600,000 Gross Profit Expenses: Administration expenses Salaries Long-service leave Warranty expenses Depreciation - plant Insurance Profit before tax 400,000 320,000 40,000 80,000 300,000 40,000 1,180,000 1,420.000 Assets and Liabilities as disclosed in the Statement of Financial Position as at 30 June 2020 [Extract] ASSETS Cash Inventory Accounts receivable Prepaid insurance Plant -cost Less Accumulated depreciation Total Assets 120,000 320,000 360,000 16,000 1,200,000 300,000 900.000 1,716,000 LIABILITIES Accounts payable Provision for warranty expenses Loan payable Provision for long service leave Total liabilities Net Assets 200.000 60,000 616,000 40.000 916,000 800.000 Additional Information 1. The plant is depreciated over four (4) years for accounting purposes, but over three (3) years for taxation purposes. 2. All administration and salaries expenses incurred have been paid at year end. 3. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. 4. Insurance was initially prepaid to the amount of $56,000. At year end, the unused component of the prepaid insurance amounted to $16,000. Actual amounts paid are allowed as a tax deduction. 5. Warranty expenses were accrued and at year end, actual payments of $20,000 were made leaving an accrued balance of $60,000). Deductions for tax purposes are only available when the amounts are paid, and not as they are accrued. 6. None of the long service leave expense has actually been paid. It is not deductible until it is actually paid. 7. The tax rate is 30 per cent. Required: Prepare a tax reconciliation (that is, determine Robinson Ltd's taxable income). 5 Marks Complete the Taxation Worksheet provided on page 5 in accordance with AASB 112: Income Taxes. [Copy the table provided in page 5 and paste it in your answer document to complete the Taxation Worksheet]. Taxation worksheet for Robinson Ltd for the year ended 30 June 2020 Extract from Balance Tax Bases Deductible Taxable temporary temporary differences differences Tax expense Current tax payable Item ASSETS Cash 120,000 120,000 A/ Receivables Inventory 360,000 320,000 360,000 320,000 Prepaid insurance 16,000 Plant 900,000 800,000 Total Assets 1,716,000 1,600,000 LIABILITIES Accounts Payable 200,000 200,000 60,000 Provision for warranty expenses Provision for long service leave Loan payable 40,000 616,000 616,000 Total Liabilities 916,000 816,000 NET ASSETS 800,000 784,000 Temporary differences at end of period Less Prior period amounts Question 2 20 Marks Robinson Ltd commences operations on 1 July 2019 and presents its first statement of comprehensive income and first statement of financial position on 30 June 2020. The following information is available: Statement of Comprehensive Income for the year ended 30 June 2020 [Extract] 2,600,000 Gross Profit Expenses: Administration expenses Salaries Long-service leave Warranty expenses Depreciation - plant Insurance Profit before tax 400,000 320,000 40,000 80,000 300,000 40,000 1,180,000 1,420.000 Assets and Liabilities as disclosed in the Statement of Financial Position as at 30 June 2020 [Extract] ASSETS Cash Inventory Accounts receivable Prepaid insurance Plant -cost Less Accumulated depreciation Total Assets 120,000 320,000 360,000 16,000 1,200,000 300,000 900.000 1,716,000 LIABILITIES Accounts payable Provision for warranty expenses Loan payable Provision for long service leave Total liabilities Net Assets 200.000 60,000 616,000 40.000 916,000 800.000 Additional Information 1. The plant is depreciated over four (4) years for accounting purposes, but over three (3) years for taxation purposes. 2. All administration and salaries expenses incurred have been paid at year end. 3. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. 4. Insurance was initially prepaid to the amount of $56,000. At year end, the unused component of the prepaid insurance amounted to $16,000. Actual amounts paid are allowed as a tax deduction. 5. Warranty expenses were accrued and at year end, actual payments of $20,000 were made leaving an accrued balance of $60,000). Deductions for tax purposes are only available when the amounts are paid, and not as they are accrued. 6. None of the long service leave expense has actually been paid. It is not deductible until it is actually paid. 7. The tax rate is 30 per cent. Required: Prepare a tax reconciliation (that is, determine Robinson Ltd's taxable income). 5 Marks Complete the Taxation Worksheet provided on page 5 in accordance with AASB 112: Income Taxes. [Copy the table provided in page 5 and paste it in your answer document to complete the Taxation Worksheet]. Taxation worksheet for Robinson Ltd for the year ended 30 June 2020 Extract from Balance Tax Bases Deductible Taxable temporary temporary differences differences Tax expense Current tax payable Item ASSETS Cash 120,000 120,000 A/ Receivables Inventory 360,000 320,000 360,000 320,000 Prepaid insurance 16,000 Plant 900,000 800,000 Total Assets 1,716,000 1,600,000 LIABILITIES Accounts Payable 200,000 200,000 60,000 Provision for warranty expenses Provision for long service leave Loan payable 40,000 616,000 616,000 Total Liabilities 916,000 816,000 NET ASSETS 800,000 784,000 Temporary differences at end of period Less Prior period amounts