Question 4

Spotless limited is a company operating in the household cleaning industry. The following information has been presented to you:

Extract from Balance Sheet as 31 December 2018

	2018	2017
Property, plant and equipment	?	355 000
Expenses prepaid	10 000	0
Income tax received in advance(taxable in the year of receipt)	28 000	15 000

Additional information

* The tax base of the property, plant and equipment balance at 31 December 2017 was 290 000.

* During 2018 depreciation was 35 000 and wear and tear allowed was 25 000.

There was no other movement of property, plant and equiment during 2018.

* Profit before tax is 300 000

* Dividend income of 5 000 was earned during 2018.

* There are no other temporary or permanent differences other than those evident from the information provided.

* The normal income tax rate is 30%

Required:

4.1 Calculate the current income tax and deferred tax for the year ended 31 Decemeber 2018.

4.2 Journalise the current and deferred income tax adjustments for the year ended 31 Decemeber 2018.

4.3 Disclose the Taxation note as at 31 December 2018 in accordance with International Financial Reporting Standards (IFRS).