Question 2 (7 marks) (Note this question is from the Week 8 Tutorial) Your client is a medium-sized manufacturing company and has provided you with its accounting records for the financial year ending 30 June 2020. The following amounts listed below from (a) (f) are included in the accounting records. How would you treat them for tax purposes? (Note The exact amounts are to be calculated and discussed in your response) (a) The provision for long service leave for the employees is $35,000. The actual amount paid during the year was $20,000 for the year ended 30 June 2020. (1 mark) (b) The Insurance premium on the plant and equipment is $30,000, which was paid on 1 March 2020 for the next 12 months. (1 mark) 3 (c) As at 30 June 2020, there was an outstanding electricity account for $2,000 and a telephone account for $5,000 which are both still to be paid. (1 mark) (d) A maintenance contract on the factory equipment for 12 months is $12,000. The payment was made on 1 October 2019. (1 mark) (e) The sum of $200,000 was paid on 1 August 2019 to the Managing Director as compensation for the early termination of her employment contract. The employment contract had one year to go. It would have ended on 30 July 2020. (1 mark) (f) There is interest expense of $70,000 on a loan which has three years to run that was originally used to purchase a computer repair business. The business ceased to operate on 30 June 2020. (1 mark) How would your answers to (b) and (d) change if your client is a small-sized company? (1 mark) (7 marks. Word limit: minimum 120 to maximum 150 words)

Question 1 (7 marks) (Note this question is based on the Week 7 Tutorial) An extract of the Asset Register of Ace Pty Ltd ("Ace") for the 2018 - 2019 Income year is shown as follows: Asset Method Cost Opening Adjustable Value 1,200 1,200 Effective Decline in Closing Life Value for Adjustable This period Value 3 years 800 Printer 400 Desks Diminishing Value Prime Cost Prime Cost 3,000 2,400 2,600 1,040 300 10 years 5 years Appliances 2,100 520 520 All depreciable assets are 100% for business use and Ace uses a low-value pool for all eligible assets. The closing value of the low-value pool at 30 June 2019 was $8,000. Ace purchased a camera on 20 Jan 2020 for $840. Advise Ace of the Income Tax consequences arising out of the above information for the 2019 - 2020 Income year assuming Ace is not a small business entity. (7 marks. Word limit: Minimum of 120 words. Maximum of 150 words)