Question 6.10 Current and deferred tax worksheets and tax entries

From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position as at 30 June 2017 and 30 June 2016 are shown below. The statements for the current year are yet to be finalized by accounting for income tax.

Additional information

? The original cost of the land is $200 000.

? The tax written down value of equipment at 30 June 2017 is $28 000 (2016: $35 000). During the 2017 year, there were no additions or disposals of equipment.

? Legal fees of $3800 are capital in nature and non-deductible for tax purposes.

? Other creditors at 30 June 2017 include an accrual for accounting fees of $4500 for work not yet performed (2016: $nil). For tax purposes, the accounting fees are deductible only if work has been performed.

? For tax purposes, restructuring costs are deductible only when paid.

? Other debtors at 30 June 2017 include $41 200 relating to an insurance claim that is in-process. Insurance income is only assessable for tax purposes after the insurance proceeds have been received.

? The corporate tax rate is 30%.

Prepare the current tax worksheet for the year to 30 June 2017 and the current tax entries for the year.

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FROMTHEHIP LTD Statement of Profit or Loss for the year ending 30 June Income Service revenue Rent revenue Insurance claim for loss of profits Less: Expenses Employee expenses Insurance expense Accounting fees Bad and doubtful debts Cleaning and maintenance Depreciation of equipment Entertainment expenses Interest on borrowings Legal fees Motor vehicle expenses Other Restructuring costs Profit before tax $900 000 50 000 41 200 660 000 50 000 5 500 19 500 3 250 5 500 4 000 75 000 3 800 6 000 3 750 23 000 991 200 859 300 $ 131 900 FROMTHEHIP LTD Statement of Financial Position (Extract) as at 30 June Assets Cash at bank Trade debtors Allowance for doubtful debts Prepaid insurance Land- at fair value Equipment - at cost Accumulated depreciation Other debtors Deferred tax asset Liabilities Trade creditors Borrowings Unearned rent revenue Provision for employee benefits Provision for restructuring Other creditors Current tax liability Deferred tax liability 2017 $ 900 100 240 550 (38 000) 10 950 450 000 58 000 (24 500) 142 400 ? 239 000 543 800 50 000 49 500 23 000 10 000 ? 2016 $ 800 100 200 000 (20 000) 5 000 300,000 58 000 (19 000) 18 000 245 000 438 500 40 000 13 300 32 700 FROMTHEHIP LTD Statement of Profit or Loss for the year ending 30 June Income Service revenue Rent revenue Insurance claim for loss of profits Less: Expenses Employee expenses Insurance expense Accounting fees Bad and doubtful debts Cleaning and maintenance Depreciation of equipment Entertainment expenses Interest on borrowings Legal fees Motor vehicle expenses Other Restructuring costs Profit before tax $900 000 50 000 41 200 660 000 50 000 5 500 19 500 3 250 5 500 4 000 75 000 3 800 6 000 3 750 23 000 991 200 859 300 $ 131 900 FROMTHEHIP LTD Statement of Financial Position (Extract) as at 30 June Assets Cash at bank Trade debtors Allowance for doubtful debts Prepaid insurance Land- at fair value Equipment - at cost Accumulated depreciation Other debtors Deferred tax asset Liabilities Trade creditors Borrowings Unearned rent revenue Provision for employee benefits Provision for restructuring Other creditors Current tax liability Deferred tax liability 2017 $ 900 100 240 550 (38 000) 10 950 450 000 58 000 (24 500) 142 400 ? 239 000 543 800 50 000 49 500 23 000 10 000 ? 2016 $ 800 100 200 000 (20 000) 5 000 300,000 58 000 (19 000) 18 000 245 000 438 500 40 000 13 300 32 700

Answer rating: 100% (QA)

A Current Tax Worksheet For the year ended 30 June 2017 Accounting profit before income tax 131 900 ... View the full answer