QUESTION 2(20 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 Depreciation on Buildings Allowance for doubtful debts Increase in the provision for Annual leave Depreciation on Vehicles Goodwill impairment $5,000 $15,000 $9,000 $12,000 $20,000 $15,000 An extract of the Statement of Financial Position as at June 30, 2022 for accounting and tax purposes appears as follows: Carrying Amt Tax Base Assets 85,000 63,000 85,000 68,000 Cash at Bank Accounts Receivable Buildings Less accumulated depreciation Motor Vehicles Less accumulated depreciation 535,000 550,000 550,000 -15,000 90,000 20,000 550,000 0 90,000 25,000 70,000 65,000 768,000 753,000 Liabilities Accounts payable Provision for Annual leave Motor Vehicle Lease 35,000 0 35,000 4,000 45,000 84.000 45,000 80.000 688,000 Net Assets 669,000 2. Calculate temporary differences (3 marks ) Temporary Differences Temporary Differences Carrying Amt Tax Base Assets TTD DTD CA - TB - Liabilities - CA - TB Net Assets 3. GENERAL JOURNAL OF Swintopia LTD (4 marks) DETAILS DR CR DATE 30/6/2022 4. Reconciliation of pre-tax profit to taxable income (4 marks ) Reconciliation .+/-permarlent differences .+/- temporary differences Taxable income Page 200M 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 ) 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 The rate of income tax is 30% Required: 1. Prepare a schedule to calculate taxable income 2. Calculate: a. Taxable temporary differences b. Deductible temporary differences 3. Prepare the journal entries to account for income tax expense in accordance with AASB112, recording: - a. Income tax expense b. Deferred Tax asset C. Deferred Tax liability d. Any other relevant journals. 4. Prepare a statement reconciling pre-tax profit to taxable income 1. Schedule to calculate taxable income (5 marks ) Accounting Profit before tax - taxable income $ $ add non-deductible expenses less allowable deductions