At 30 June 2022, E-Surfboards Ltd had the following temporary differences:

E-Surfboards Ltd depreciates computers over five years in its accounting records but over three years for tax purposes. The straight-line method is used. During the year, E-Surfboards wrote off bad debts amounting to $15 000. Warranty costs of $70 000 were paid during the year. No amounts were paid for long-service leave during the year. The following information is extracted from the statement of financial position at 30 June 2023:

There was no acquisition of plant and equipment during the year.

The tax rate as at 30 June 2022 and 30 June 2023 was 30 percent.

REQUIRED

a. Calculate the amount of each of E-Surfboards’ temporary differences, if any, at 30 June 2022, and state whether it is deductible or taxable.

b. What is the balance of the deferred tax liability and deferred tax asset, if any, as at 30 June 2022?

c. Calculate E-Surfboards’ taxable profit for the year ending 30 June 2023.

d. Prepare journal entries to record current tax and deferred tax for the year ending 30 June 2023.

Transcribed Image Text:

Asset or liability Computers at cost Accumulated depreciation Carrying ($000) 300 (60) amount Tax ($000) 300 (100) base Temporary difference ($000)