Question 2 (22 marks) Corona Ltd commences operation on 1 July 2019 and you have obtained the following information Extract from internal statement of financial position as at 30 June 2020 (prior to recording year end tax entries) Assets Cash 193,000 Marketable Securities 5,000 Inventory 164,000 Interest Receivable 7,000 Accounts Receivables (net) 120,000 Buildings at Cost 1,265,000 Plant and equipment (net) 600,000 Total assets $2,354,000 Liabilities Accounts Payables 280,000 Provision for warranty expenses 40,000 Loan payable 298,000 Total liabilities $618,000 Net assets $1,736,000 Other information The tax written down value of the plant and equipment at 30 June 2020 was $540,000 The Marketable government securities are reported in the statement of financial position at their fair value with any gains and losses being recognised in profit or loss The cost of the Marketable government securities at acquisition was $2,000 Any gains and losses are taxed when the investment is sold At the 30 June 2020 the unrealised gains is $3,000 Trade receivables are net of $6,000 in provision for doubtful debts There were no bad debt write offs during the year Only bad debts written off are allowed as deductibles for tax purposes Amounts received from sales, including those on credit terms, are taxed at the time the sale is made All administration and salary expenses incurred have been paid Administration and salary expenses are deductible for tax purposes when paid Interest receivable represent interest revenue received in advance Interest income is assessable for tax purposes when received Provision for warranty expenses represent warranty expense accrued and at year end Actual warranty expenses paid during the year was $5,000 Warranty expense is deductible for tax purposes when paid For the year ended 30th June 2020 the taxable profit (after all adjustments to accounting profit) was $295,000 The tax rate is 30 percent Required Prepare the deferred tax worksheet for Corona Ltd for the year ended 30 June 2020 provided below (8 marks) Prepare the applicable journal entries at 30 June 2020 to recognize the tax adjustments determined in the deferred tax worksheet (5 marks) How would your answer differ if Corona Ltd adopted the revaluation model and at 30 June 2020 revalued Buildings upward by $100,000 Note that revaluation adjustments recognised under AASB 116 Property, Plant and Equipment are not assessable or deductible for tax purposes (9 marks)

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Question 2 (22 marks)

Corona Ltd commences operation on 1 July 2019 and you have obtained the following information:

Extract from internal statement of financial position as at 30 June 2020 (prior to recording year-end tax entries)

Assets
Cash	193,000
Marketable Securities	5,000
Inventory	164,000
Interest Receivable	7,000
Accounts Receivables (net)	120,000
Buildings at Cost	1,265,000
Plant and equipment (net)	600,000
Total assets	$2,354,000
Liabilities
Accounts Payables	280,000
Provision for warranty expenses	40,000
Loan payable	298,000
Total liabilities	$618,000
Net assets	$1,736,000

Other information:

The tax written down value of the plant and equipment at 30 June 2020 was $540,000.

The Marketable government securities are reported in the statement of financial position at their fair value with any gains and losses being recognised in profit or loss. The cost of the Marketable government securities at acquisition was $2,000. Any gains and losses are taxed when the investment is sold. At the 30 June 2020 the unrealised gains is

$3,000.

There were no bad debt write-offs during the year. Only bad debts written off are allowed as deductibles for tax purposes.

Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.

All administration and salary expenses incurred have been paid. Administration and salary expenses are deductible for tax purposes when paid.

Interest receivable represent interest revenue received in advance. Interest income is assessable for tax purposes when received.

Provision for warranty expenses represent warranty expense accrued and at year end. Actual warranty expenses paid during the year was $5,000. Warranty expense is deductible for tax purposes when paid.
For the year ended 30th June 2020 the taxable profit (after all adjustments to accounting profit) was $295,000.

Required:

Prepare the deferred tax worksheet for Corona Ltd for the year ended 30 June 2020 provided below. (8 marks)

Prepare the applicable journal entries at 30 June 2020 to recognize the tax adjustments determined in the deferred tax worksheet. (5 marks)

How would your answer differ if Corona Ltd adopted the revaluation model and at 30 June 2020 revalued Buildings upward by $100,000. Note that revaluation adjustments recognised under AASB 116 Property, Plant and Equipment are not assessable or deductible for tax purposes. (9 marks)