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You are provided the information for the following asset/liability for the year ended 30 June 2019 for Decker Ltd. Assume the tax rate is 28
You are provided the information for the following asset/liability for the year ended 30 June 2019 for Decker Ltd. Assume the tax rate is 28 percent. Government Bonds On the balance sheet, there is an investment of $300,000 in Government bonds, which pays interest at 5% per annum. For tax purposes, the interest income from these Government bonds is never taxable. Rent revenue received in advance The opening balance of the rent revenue received in advance was $50,000. During the year, Decker Ltd has received $100,000 cash with respect to rent revenue during the year. In the Income Statement, an amount of $120,000 was recognised as rent revenue this year. For tax purposes, the Inland Revenue taxes all rent received on a cash basis. Required: (a) In accordance with NZ IAS 12, calculate the temporary difference arising from each of the above asset/liability. Show all workings. (4 marks) (b) Explain whether there is a deferred tax asset or deferred tax liability arising from each of the above asset/liability. Also calculate the amount of deferred tax asset/liability. [word limit: 160 words] (4 marks)
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