Soundtrack Ltd is preparing tax effect calculations for the year ending 30 June 2021 and has asked you to help in determining the tax base for assets and liabilities. (a) Briefly explain in your own words what is meant by the tax base of an asset or liability, and why it may be different to the carrying amount of the same item. (b) Soundtrack Ltd has provided you with the following table of carrying amounts for its assets and liabilities. Complete the table by showing the tax bases of the assets and liabilities. Note: plant was purchased two years ago at a cost of $135 000. For accounting purposes it is expected to have a life of three years; however, for taxation purposes it can be depreciated over five years. It is not expected to have any residual value. Carrying Amount Tax Base ($'000) $ $ Assets Cash Accounts receivable Less: Allow D/Debts 154 61 (8) 53 Prepaid insurance Inventory Plant Less: Acc Dep 16 35 135 (90) 45 32 8 Liabilities Accounts payable Prov. Long Service Leave Prov. warranty Loan payable 11 86 Soundtrack Ltd is preparing tax effect calculations for the year ending 30 June 2021 and has asked you to help in determining the tax base for assets and liabilities. (a) Briefly explain in your own words what is meant by the tax base of an asset or liability, and why it may be different to the carrying amount of the same item. (b) Soundtrack Ltd has provided you with the following table of carrying amounts for its assets and liabilities. Complete the table by showing the tax bases of the assets and liabilities. Note: plant was purchased two years ago at a cost of $135 000. For accounting purposes it is expected to have a life of three years; however, for taxation purposes it can be depreciated over five years. It is not expected to have any residual value. Carrying Amount Tax Base ($'000) $ $ Assets Cash Accounts receivable Less: Allow D/Debts 154 61 (8) 53 Prepaid insurance Inventory Plant Less: Acc Dep 16 35 135 (90) 45 32 8 Liabilities Accounts payable Prov. Long Service Leave Prov. warranty Loan payable 11 86