Big Construction Ltd has requested that you prepare the tax-effect accounting information for the year ended 30 June 2023. The following has been extracted from their internal reports:
- Accounting profit before tax for the year...… $950,000
- Expenses brought to account included:
Depreciation - plant...….. $93,000
None-deductible Fine...…..$1,000
Impairment loss on goodwill...….. $11,000
Long service leave...….. $16,000
- Accumulated depreciation on plant for tax purposes was $130,000 on 30 June 2022 and $250,000 on 30 June 2023. There were no additions or disposals of plant during the year.
- Bad debts of $16,000 were written off during the year against the Allowance for Doubtful Debts.
- On 1 March 2023 the company income tax rate was increased from 30% to 35%, effective for the 2022/2023 tax year and onwards. The deferred tax opening balances on 1 July 2022 were:
     Deferred Tax Asset (based on DTD of $ 85,000)…. $ 25,500
     Deferred Tax Liability (based on TTD of $ 65,000)…. $ 19,500
     (DTD: deductible temporary differences; TTD: taxable temporary differences)
- Reporting date is 30 June.

Relevant assets and liabilities as disclosed in the Balance Sheet as at 30 June 2023 were:
Assets
Accounts Receivable...… $328,000
Less: Allowance for Doubtful Debts [2022 $11,000]….     15,000      $313,000
Inventory...…    286,000
Plant - cost...…. $800,000
Less: Accumulated Depreciation - Plant...… 175,000          625,000                                            
Liabilities
Accounts Payable...….. $205,000
Provision for long-service leave...…. [2022 $57,000]…       59,000                                                    
Required:
(i) Provide the journal entry to adjust the opening deferred tax accounts due to the tax rate change. (Narrations are required)
(ii) Show the calculation of income tax expense and income taxable payable.

Answer rating: 100% (QA)

i Journal entry to adjust the opening deferred tax accounts due to the tax rate change Date 30 June ... View the full answer