Which of the following items is NOT classified as a financing activity in the statement of cash flows?

A. Additional capital paid in by shareholders

B. Drawings of a sole trader

C. Payment of mortgages

D. Received dividends from a company that the accounting entity has invested in.

question # 2

Differences between the carrying amounts of an entitys net assets determined under accounting standards and accrual accounting, and the tax bases of those net assets determined under the Income Tax Assessment Act, are known as:

A.

deferred tax asset.

B.

tax losses.

C.

the current income tax liability.

D.

temporary differences

Question # 3

Eve Ltd has an equipment that was initially acquired at a cost of $135 000 on 1 July 2019. The equipment has zero residual value. The depreciation rates for accounting and tax purposes are 4 years and 5 years respectively. The company tax rate is 30%.

Required

Type your answers in the spaces provided showing all workings.

As at the year end 30 June 2021,

(a) what is the carrying amount and tax base of the asset?

(b) what is the amount of the temporary difference?

(c) will that lead to deferred tax asset or deferred tax liability?

(d) Prepare the appropriate journal entry to account for the future tax consequences.

(e) Provide the reason for recording a deferred tax liability or a deferred tax asset in part (c) and d.