• The newly qualified accountant of Parmesan Limited is busy finalising the financial statements of the company for the year ended 28 February 2019. Unfortunately, the accountant only remembers a few statements stated by his university lecturer as the venue in which the lecture took place was newly painted and he felt that watching the paint dry was likely to be more exciting than listening to an accounting lecture. He only remembered the following three statements: 1. The objective of IAS 12 is to account for current and future tax consequences of the recovery of assets and liabilities in the Statement of Financial Position. 2. Thetaxbaseofanassetis: • the amount that will be deductible for tax purposes against any taxable economic benefits that will flow to an entity when it recovers the carrying amount of the asset.if those economic benefits will not be taxable, the tax base of the asset is equal to its carrying amount. 3. The tax base of a liability is: • its carrying amount, less any amount that will be deductible for tax purposes in respect of that liability in future periods. • in the case of revenue received in advance, the tax base of the resulting liability is the carrying amount, less any amount of revenue that will not be taxable in future periods. The accountant believes that he has a good grasp of the current tax consequences but does not understand what IAS 12 means by accounting for future tax consequences. He has the following information available to him: Property, plant and equipment Rent received in advance Interest income receivable 2019 120 000 (5 000) 20 000 2018 145 000 (2 000) 0 The previous accountant also left behind the following information: • Profit before tax is R250 000. • Dividend income was R6 000. • Tax base of property, plant and equipment at 28 February 2018 was R115 000. • Wear and tear is R30 000 per annum. • Rent received in advance is taxable in the year it is received. • Interest income receivable is taxed in the year the interest is earned • The income tax rate is 30%Required: 1. Discuss how the current taxation and taxation will be recorded in the financial statements.(Hint: discuss the element) (15) 2. Prepare the journals necessary to account for current tax and deferred tax in the financial statements of Parmesan Limited. (Show all workings) (14) 3. Disclose the above in the Taxation note found in the notes to the financial statements. (6)