QUESTION 2020 Marks) From the following information relating to Swintopia Ltd at June 30, 2022 prepare all the necessary entries for tax effect accounting: Swintopia reported a net profit before income tax of $870,000 for the year. The net profit was determined after charging the following items : . Entertainment expenses $5,000 Depreciation on Buildings $15,000 Allowance for doubtful debts $9,000 Increase in the provision for Annual leave Depreciation on Vehicles $20,000 Goodwill impairment $15,000 $12,000 An extract of the Statement of Financial Position as at June 30, 2022 for accounting and tax purposes appears as follows: Carrying Amt Tax Basel Assets Cash at Bank 85,000 85,000 Accounts Receivable 68,000 550,000 Buildings 550,000 Less accumulated depreciation 15,000 Motor Vehicles 90,000 Less accumulated depreciation 20,000 63,000 550,000 565,000 0 90,000 70,000 25,000 753,000 65,000 768,000 35,000 Liabilities Accounts payable Provision for Annual leave Motor Vehicle Lease 0 35,000 4,000 45,000 84,000 45,000 80,000 Net Assets 669,000 688,000 Additional Information: . Depreciation on buildings is to be regarded as a permanent difference Depreciation on Motor vehicles for taxation purposes is $25,000 Entertainment expenses are not an allowable deduction; A bad debt of $4,000 from the previous financial year has been written off and can now be claimed as a tax deduction. (this is written off against the provision) Annual leave paid during the year was $8,000 1. Schedule to calculate taxable income (5 marks ) Accounting Profit before tax - taxable income $$ ladd non-deductible expenses less allowable deductions Taxable Income 2. Calculate temporary differences (3 marks ) Temporary Differences Temporary Differences Carrying Amt Tax Base TTD DTD Assets CA - TBTB - CA Liabilities TB - CACA-TB Net Assets 3. GENERAL JOURNAL OF Swintopia LTD (4 marks ) DATE DETAILS DR CR 30/6/2022 4. Reconciliation of pre-tax profit to taxable income (4 marks) DATE DETAILS DR CR 30/6/2022 4. Reconciliation of pre-tax profit to taxable income (4 marks) Reconciliation .+/- permanent differences .+/- temporary differences Taxable Incomel 5a . What is the objective of Accounting standard AASB112? (2 marks) 5b. Why is there a difference between accounting profit and taxable income ? (2 marks ) Department Details Author: Sue Rollnik Date created: Date last updated: 918/2021 File name: FNSACC514 Prepare financial reports for Corporate Entities S2 2021 Version: Template Details Author: VE Quality and Policy Date created: 07 December 2018 Date last updated: 21 December 2018 Location: VE Staff Wiki/Ouality/Quality Life CyclePlan Version: 1.1 Page 4 of 5 QUESTION 2020 Marks) From the following information relating to Swintopia Ltd at June 30, 2022 prepare all the necessary entries for tax effect accounting: Swintopia reported a net profit before income tax of $870,000 for the year. The net profit was determined after charging the following items : . Entertainment expenses $5,000 Depreciation on Buildings $15,000 Allowance for doubtful debts $9,000 Increase in the provision for Annual leave Depreciation on Vehicles $20,000 Goodwill impairment $15,000 $12,000 An extract of the Statement of Financial Position as at June 30, 2022 for accounting and tax purposes appears as follows: Carrying Amt Tax Basel Assets Cash at Bank 85,000 85,000 Accounts Receivable 68,000 550,000 Buildings 550,000 Less accumulated depreciation 15,000 Motor Vehicles 90,000 Less accumulated depreciation 20,000 63,000 550,000 565,000 0 90,000 70,000 25,000 753,000 65,000 768,000 35,000 Liabilities Accounts payable Provision for Annual leave Motor Vehicle Lease 0 35,000 4,000 45,000 84,000 45,000 80,000 Net Assets 669,000 688,000 Additional Information: . Depreciation on buildings is to be regarded as a permanent difference Depreciation on Motor vehicles for taxation purposes is $25,000 Entertainment expenses are not an allowable deduction; A bad debt of $4,000 from the previous financial year has been written off and can now be claimed as a tax deduction. (this is written off against the provision) Annual leave paid during the year was $8,000 1. Schedule to calculate taxable income (5 marks ) Accounting Profit before tax - taxable income $$ ladd non-deductible expenses less allowable deductions Taxable Income 2. Calculate temporary differences (3 marks ) Temporary Differences Temporary Differences Carrying Amt Tax Base TTD DTD Assets CA - TBTB - CA Liabilities TB - CACA-TB Net Assets 3. GENERAL JOURNAL OF Swintopia LTD (4 marks ) DATE DETAILS DR CR 30/6/2022 4. Reconciliation of pre-tax profit to taxable income (4 marks) DATE DETAILS DR CR 30/6/2022 4. Reconciliation of pre-tax profit to taxable income (4 marks) Reconciliation .+/- permanent differences .+/- temporary differences Taxable Incomel 5a . What is the objective of Accounting standard AASB112? (2 marks) 5b. Why is there a difference between accounting profit and taxable income ? (2 marks ) Department Details Author: Sue Rollnik Date created: Date last updated: 918/2021 File name: FNSACC514 Prepare financial reports for Corporate Entities S2 2021 Version: Template Details Author: VE Quality and Policy Date created: 07 December 2018 Date last updated: 21 December 2018 Location: VE Staff Wiki/Ouality/Quality Life CyclePlan Version: 1.1 Page 4 of 5