Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The profit before tax, reported in the statement of comprehensive income of Sam Ltd for the year ended 3 0 June 2 0 2 3
The profit before tax, reported in the statement of comprehensive income of Sam Ltd for the year ended June
amounted to:
Subscription revenue
Government award income
Doubtful debts expense
Depreciation Equipment
Depreciation Buildings
Maintenance expense
Employee benefits expense
Rent expense
Entertainment expense
The draft statements of financial position of the company at June and showed the following assets and liabilities:
Assets in
Cash
Inventory
Accounts receivable
Allowance for doubtful debts
Prepaid rent
Equipment
Accumulated depreciation Equipment
Buildings
Accumulated depreciation Buildings
Land
Goodwill net
Deferred tax asset
Assets in
Cash
Inventory
Accounts receivable
Allowance for doubtful debts
Prepaid rent
Equipment
Accumulated depreciation Equipment
Buildings
Accumulated depreciation Buildings
Land
Goodwill net
Deferred tax asset
Liabilities
Liabilities
Accounts payable
Provision for maintenance
Provision for employee benefits
Subscription received in advance
Deferred tax liability
Liabilities
Liabilities
Accounts payable
Provision for maintenance
Provision for employee benefits
Subscription received in advance
Deferred tax liability
Additional Information:
Subscription revenue is tax assessable when it is received in cash
Government award income is not tax assessable
Doubtful debts are tax deductible when the company actually incurs bad debtswrite off
For accounting purpose, the equipment is depreciated using the annual straight line method at a rate of:
For tax purpose, however, the equipment is depreciated using the annual straight line method at a rate of:
Depreciation of buildings is not allowed as tax deductions and goodwill is not tax assessable
Employee benefits are tax deductible when they are paid in cash to the employees
Rent expense and maintenance expense are tax deductible when paid in cash
Entertainment expense is not allowed as tax deduction
Assume a tax rate for the financial years ending June and to be:
Required:
Calculate the taxable incometax loss and the current tax liability if any for the financial year ended June
Prepare a journal entry to recognise the current tax liabilitytax loss.
Calculate deferred tax asset and deferred tax liability balances as at June
Prepare the deferred tax journal entries for the year ended June
Note that you are NOT required to prepare journals to offset the deferred tax asset and deferred tax liability balances.
Show your calculation using deferred tax worksheets by creating separate columns for:
carrying amount, tax base, taxable temporary differences and deductible temporary differences.
Assume that by December there was a change in tax rate to:
With reference to AASB Income Taxes, discuss the accounting treatment of the deferred tax asset and deferred tax liability
balances as at December following a lower tax threshold for the financial year.
Prepare the journal entries to record the effect of change in tax rate.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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