QUESTION THREE (6 Marks)

The following data applies to the two unrelated companies Aldi Ltd and Wooli Ltd:

Aldi Ltd

Wooli Ltd

Profit before tax for the year to 30 June 2020

$1,300,000

$136,000

Taxable income for the year to 30 June 2020

340,000

150,000

Deferred tax liability 1 July 2019

90,000

Deferred tax asset 1 July 2019

15,000

Taxable temporary differences at 30 June 2020

960,000

306,000

Deductible temporary differences at 30 June 2020

70,000

All taxable and deductible temporary differences relate to the profit or loss. Assume a corporate tax rate of 30%.

a.For each company, prepare the journal entries to record the current and deferred tax for 30 June 2020. Show all calculations.

[Type Answer Here]

b.For each company, prepare the income tax section of the statement of profit or loss and other comprehensive income for the year ended 30 June 2020, and show the note disclosure for the current and deferred components of income tax expense.