Question
Skylar Ltd commenced operations on 1 July 2020. It disclosed a net profit before tax of $90,000 for the year ended 30 June 2021. This
Skylar Ltd commenced operations on 1 July 2020. It disclosed a net profit before tax of $90,000 for the year ended 30 June 2021.
This profit was determined after charging the following items:
Impairment loss- goodwill $4,000
Depreciation of Plant & Equipment $15,000
Depreciation of motor vehicles $5,000
Doubtful Debts $5,000
Increase in Provision for Employee Entitlements $12,000
On 30 June 2021, the accounting and taxation records disclosed the following:
Carrying Amount | Tax Base | |||
ASSETS Plant & Equipment Accumulated Dep'n: Motor Vehicles Accumulated Dep'n: Cash Accounts-Receivable (Net) LIABILITIES Accounts-Payable Prov'n for Employee Entitlements NET ASSETS | 60,000 -15,000 30,000 -5,000 | 45,000 25,000 20,000 85,000 175,000 50,000 42,000 92,000 83,000 | 60,000 -20,000 30,000 -7,500 | 40,000 22,500 20,000 90,000 172,500 50,000 30,000 80,000 92,500 |
Additional information:
The plant and equipment, which cost 60,000 was purchased on 1 July 2020 and is being depreciated at 25% for accounting purposes and at 33-1/3% for tax purpose.
The doubtful debts are not allowed for tax purposes.
There were no employee entitlements taken during the 2021 financial year.
The motor vehicle, which was purchased on 1 July 2020 and cost $30,000 is depreciated over 6 years for accounting purposes and over 4 years for tax purposes. Assume straight line depreciation with NIL salvage value.
Impairment loss for goodwill is not allowable as a tax deduction.
Required tasks (Use Excel spreadsheet to display your answer):
- Do statement of taxable income for the year ended 30 June 2021.
- Calculate Deductible temporary differences
- Calculate Taxable temporary differences
- (Do journal entries for income tax expense in accordance with AASB112. (The rate of company tax is 30%)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
The question is complete so lets go through each required task stepbystep to help Skylar Ltd 1 Statement of Taxable Income for the Year Ended 30 June 2021 Start by reconciling the accounting profit to ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started