Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Your client is a sole trader consulting business operated by the owner with five part-time employees, three being employed in the past year due to
Your client is a sole trader consulting business operated by the owner with five part-time employees, three being employed in the past year due to growth of the business and your client is seeking to employ a further two full time employees to satisfy contracts for which deposits have been received, in place for the next financial year. From the time the business was established, 1 July 2015, it has been accounting for tax purposes on a cash basis. For the current financial year your client is considering if they should account on an accruals basis as the size of the business is increasing. In considering the options the client notes that as at 30 June it has $40,000, which was paid to it from consulting work that was undertaken in the previous financial year. A. Calculate Jamee's assessable income for the current year ended 30 June 2020. B. Should this amount be included in its assessable income for this year or last year if they decide to go ahead and report on an accruals basis? C. Would your answer be different if your client had deliberately told the customer not to pay its account for $40,000 until after 30 June? Your client is a sole trader consulting business operated by the owner with five part-time employees, three being employed in the past year due to growth of the business and your client is seeking to employ a further two full time employees to satisfy contracts for which deposits have been received, in place for the next financial year. From the time the business was established, 1 July 2015, it has been accounting for tax purposes on a cash basis. For the current financial year your client is considering if they should account on an accruals basis as the size of the business is increasing. In considering the options the client notes that as at 30 June it has $40,000, which was paid to it from consulting work that was undertaken in the previous financial year. A. Calculate Jamee's assessable income for the current year ended 30 June 2020. B. Should this amount be included in its assessable income for this year or last year if they decide to go ahead and report on an accruals basis? C. Would your answer be different if your client had deliberately told the customer not to pay its account for $40,000 until after 30 June
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