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Question 2

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A company commenced business on 1 July 2022. On 30 June 2023, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information:

Assets Liabilities

Cash $20 000 Accounts payable $50 000

Inventories 60 000 Provision for annual leave 8 000

Plant 200 000

Accumulated depreciation (20 000)

Additional information:

The plant was acquired on 1 July 2022. Depreciation for accounting purposes was 10% (straight-line method), while 20% (straight-line) was used for tax purposes.

The tax rate is 30%.

The deferred tax asses is (hint use tax worksheet):

a.

$2 400

b.

$6 000

c.

$8 000

d.

$20 000

e.

None of the above