Question 2

At 1 July 2014, Lobstar Ltd acquired the following non-current assets:

Equipment $100 000

Vehicles $80 000

They are in different classes of non-current assets and are to be measured at fair value. The expected useful lives of vehicles and equipment are 5 years and 10 years, respectively.

At 30 June 2015, the fair values of both assets were assessed. The equipment had a fair value of $82 000, and the vehicles, $70 000. The remaining useful lives were assessed to be 8 years for equipment and 7 years for vehicles.

Required

Prepare the journal entries for Lobstar Ltd for the years ending 30 June 2015 and 2016.

Question 3

Swiftsure Ltd has carried forward a deferred tax liability of 170000, arising from differences between carrying amount and tax bases of the company's assets. On 30 June 2013, the carrying amounts and tax bases of the company's assets were as follows:

Assets Carrying Amount Tax base

A $142000 $108000

B $541000 $340000

C $820000 $610000

D $86000 $40000

The current income tax expense for the year ended 30 June 2013 is $8400000 and tax rate is 30%.

Required:

(a)Prepare general journal entries on 30 June 2013 to record company's income tax expense.

(b)How would your answer differ if the balance of the deferred tax liability carried forward was $120000?