1. Company A recorded a profit before tax of $5,000,000 for the year ended 31 December 20X3. Deferred tax liability as of 31 December 20X2 was $30,800. 
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3. 1) On 1 January 20X1. Company A purchased plant and machinery costing $240,000. The useful life of the plant and machinery was eight years, but the capital allowances were to be claimed over a 3-year period. 
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5. 2) Company A completed the development phase of a new drug on 1 January 20X2, which amounted to $140,000 and was deemed to have an economic useful life of seven years for accounting purposes. The amortized expenditures were not deductible for tax purposes. 
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7. 3) Unearned revenue represents the advance cash receipt from customers for service fees that have not been provided yet and has a credit balance of $13,000 at the end of the year. Service fees were taxable during the year when the proceeds were received. 
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9. ■ Disallowed items were as follows:
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11. Entertainment expenses Donations to non-qualifying charities Disallowed transport expenses $15,000 $10,000 $9,000
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13. ■ Tax-exempt income and reliefs granted Tax-exempt income Double-deductions $34,000 $105,000 
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15. Required: 
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17. (a) Prepare the tax computation for the year ended 31 December 20X3 based on the above information. The income tax rate is 20% and remains constant across all years. 
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19. (b) Determine the ending balance of deferred tax liability and deferred tax assets on 31 December 20X3 and income tax expenses for the year 20X3.

Answer rating: 100% (QA)

a To prepare the tax computation for the year ended 31 December 20X3 we need to calculate the taxable income for the year The following steps can be u... View the full answer