SIX: Income taxes (Total: 13 marks) MelC Ltd has provided the following information and would like your help to prepare the Deferred Tax worksheet for the year ended 30 June 2020 and the relevant journal entries. Relevant figures extracted from the trial balance as at 30 June 2020 shows the following: Land, purchased for $500,000 in 2016, was revalued by $190,000 during the current period. This was the first time the entity had revalued any of its assets. Tax is applicable on any gains only when the land is sold. Buildings were purchased on 1 July 2010 for $300,000. The allowable depreciation deduction for tax purposes is 2.5% per annum on cost. Accounting depreciation is 2% on cost. Provision for annual leave is not deductible until paid. During the year, annual leave of $30,000 was paid. MelC Ltd had an annual leave provision of $40,000 on 1 July 2019. An annual leave expense of $25,000 was recognized for the year ended 30 June 2020. On 30 June 2019 the Deferred Tax Asset account had a debit balance of $12,000 and the Deferred Tax Liability account had a credit balance of $25,000. The corporate tax rate is 30%. 6.1 Complete the following deferred tax worksheet. PART A: Item Land Buildings Provision for annual leave (6 marks) DEFERRED TAX WORKSHEET (EXTRACT) AS AT 30 JUNE 2020 6.2 Prepare the journal entries to account for the above tax effects for the year ended 30 June 2020. (4 marks) DATE DETAILS DEBIT ($) CREDIT ($) Different treatment of some revenues and expenses for taxation and accounting give rise to both permanent and temporary differences between taxable and accounting profit. REQUIRED: 6.3 Discuss these permanent and temporary differences