QUESTION TWO Choose Ltd reported an accounting Profit before Income Tax of $1,000,000, for the year ended 30 June 2017. Additional Information: On 1 July 2016, Choose Ltd purchased land at a cost of $1,000,000. On 30 June 2017, the land was revalued to $1,200,000. On 1 July 2016, Choose Ltd purchased machinery at a cost of $300,000. For accounting purposes, the machinery is depreciated on a straight-line basis over 10 years, with zero residual value. For tax purposes, the equipment is depreciated 8% on cost per annum. During the financial year ended 30 June 2017, Choose Ltd prepaid insurance for $60,000. At year end, the unused component of the prepaid insurance amounted to $10,000 (and is recorded as an asset in balance sheet). The Australian Taxation Office (ATO) allows all the amounts paid for insurance for deduction. The company income tax rate is 30%. REQUIRED: (a) Calculate for Choose Ltd: taxable income, income tax expense and income tax payable for the year ended 30 June 2017 in accordance with AASB112 Income taxes, showing all working necessary to derive your answer, included any deferred tax liabilities and/or deferred tax assets as at 30 June 2017. Provide journal entries to record the income taxes for Choose Ltd in accordance with AASB112 Income taxes at 30 June 2017. (b) (6+4 = 10 marks) QUESTION TWO Choose Ltd reported an accounting Profit before Income Tax of $1,000,000, for the year ended 30 June 2017. Additional Information: On 1 July 2016, Choose Ltd purchased land at a cost of $1,000,000. On 30 June 2017, the land was revalued to $1,200,000. On 1 July 2016, Choose Ltd purchased machinery at a cost of $300,000. For accounting purposes, the machinery is depreciated on a straight-line basis over 10 years, with zero residual value. For tax purposes, the equipment is depreciated 8% on cost per annum. During the financial year ended 30 June 2017, Choose Ltd prepaid insurance for $60,000. At year end, the unused component of the prepaid insurance amounted to $10,000 (and is recorded as an asset in balance sheet). The Australian Taxation Office (ATO) allows all the amounts paid for insurance for deduction. The company income tax rate is 30%. REQUIRED: (a) Calculate for Choose Ltd: taxable income, income tax expense and income tax payable for the year ended 30 June 2017 in accordance with AASB112 Income taxes, showing all working necessary to derive your answer, included any deferred tax liabilities and/or deferred tax assets as at 30 June 2017. Provide journal entries to record the income taxes for Choose Ltd in accordance with AASB112 Income taxes at 30 June 2017. (b) (6+4 = 10 marks)