The profit before tax, as reported in the statement of profit and loss for DXB Ltd for the year ended 30 June 2020, amounted to $300 000, including the following revenue and expense items Sales revenue$1 490 000Interest revenue100 000Government grant (non taxable)45 000Cost of sales900 000Bad debts expense40 000Depreciation expense plant80 000Research and development expense77 000Long service leave expense75 000 The statement of profit and loss for DXB Ltd for the year ended 30 June 2020 also included a gain on sale of equipment of $40 000 According to AASB 116 IAS 16, this gain is not classified as revenue, but it is nevertheless part of the accounting profit before tax for the year The draft statements of financial position of DXB Ltd at 30 June 2019 and 30 June 2020 showed the following assets and liabilities 2019 2020 Assets Cash $ 180 000 $ 180 000 Inventories 200 000 400 000 Accounts receivable 220 000 300 000 Allowance for doubtful debts (20 000) (40 000) Interest receivable 100 000 80 000 Plant 800 000 800 000 Accumulated depreciation plant (160 000) (240 000) Goodwill 66 000 66 000 Deferred tax asset 155 000 Liabilities Accounts payable 200 000 120 000 Revenue received in advance 33 000 Provision for long service leave 120 000 100 000 Deferred tax liability 96 000 Additional information In the year ended 30 June 2019, DXB Ltd had a tax loss of $55 000 that it carried over in the deferred tax asset Amounts received from sales, including those on credit terms, are taxed at the time the sale is made All other general taxation rules apply The movement in the equipment account is caused by the sale of the equipment on 1 March 2020 for which a gain on sale of $40 000 was recognised as part of the profit before tax (see above) DXB Ltd had purchased the equipment on 1 July 2018 (with an estimated useful life of 2 years and no residual value) and for taxation purposes it claimed its full cost as a deduction at 30 June 2019 All research and development expenses were paid in cash during the year ended 30 June 2020 Assume the company tax rate is 30 Required Prepare the current tax worksheet and the journal entry to recognise current tax at 30 June 2020

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 27, 2024

The profit before tax, as reported in the statement of profit and loss for DXB Ltd for the year ended 30 June 2020, amounted to

The profit before tax, as reported in the statement of profit and loss for DXB Ltd for the year ended 30 June 2020, amounted to $300 000, including the following revenue and expense items.

Sales revenue$1 490 000Interest revenue100 000Government grant (non-taxable)45 000Cost of sales900 000Bad debts expense40 000Depreciation expense plant80 000Research and development expense77 000Long service leave expense75 000

The statement of profit and loss for DXB Ltd for the year ended 30 June 2020 also included a gain on sale of equipment of $40 000. According to AASB 116/IAS 16, this gain is not classified as revenue, but it is nevertheless part of the accounting profit before tax for the year. The draft statements of financial position of DXB Ltd at 30 June 2019 and 30 June 2020 showed the following assets and liabilities.

2019

2020

Assets

Cash

$ 180 000

Inventories

200 000

400 000

Accounts receivable

220 000

300 000

Allowance for doubtful debts

(20 000)

(40 000)

Interest receivable

100 000

80 000

Plant

800 000

Accumulated depreciation plant

(160 000)

(240 000)

Goodwill

66 000

Deferred tax asset

155 000

Liabilities

Accounts payable

200 000

120 000

Revenue received in advance

33 000

Provision for long service leave

120 000

100 000

Deferred tax liability

96 000

Additional information

In the year ended 30 June 2019, DXB Ltd had a tax loss of $55 000 that it carried over in the deferred tax asset.
Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. All other general taxation rules apply.
The movement in the equipment account is caused by the sale of the equipment on 1 March 2020 for which a gain on sale of $40 000 was recognised as part of the profit before tax (see above). DXB Ltd had purchased the equipment on 1 July 2018 (with an estimated useful life of 2 years and no residual value) and for taxation purposes it claimed its full cost as a deduction at 30 June 2019.
All research and development expenses were paid in cash during the year ended 30 June 2020.
Assume the company tax rate is 30%.

Required