Winter Ltd commenced operation on 1 July 2020 and prepared its first financial statements for the...
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Winter Ltd commenced operation on 1 July 2020 and prepared its first financial statements for the year ended 30 June 2021. The following information has been provided: Profit before tax for the year ended 30 June 2021 was calculated as follows: Gross Profit Less: Expenses: Long Service Leave Depreciation Plant and Equipment Salaries and Wages Warranty Claims Amortisation of Research and Development Insurance Doubtful Debts Expense Other Expenses Total expenses Profit before tax Balance Sheet items as at 30 June 2021: Details Assets: 335 Cash Inventories Accounts Receivable Less Allowance for Doubtful Debts Prepaid Insurance Plant and Equipment Less Accumulated Depreciation Research and Development Less Accumulated Amortisation Goodwill (net) Liabilities: Accounts Payable Provision for Warranty Claims Provision for Long Service Leave Loan Payable 10,000 135,000 99,000 36,000 180,000 18,000 20,000 370,000 $. 162,000 20000 540,000 135,000 600,000 180,000 $1,480,000 868,000 612,000 $ 4,000 144,000 142,000 7,200 405,000 420,000 50,000 290,000 27,000 10,000 577/200 Additional Information: a) Tax deductions for warranty expenses are only available when claims are paid b) Insurance expense is an allowable tax deduction when paid in cash c) The company can claim a tax deduction of 125% on research and development expenditure paid. There are no accrued salaries and wages at 30 June 2021 e) For accounting purposes, Winter Ltd. depreciates the cost of Plant and Machinery over four f) Long Service Leave can only be claimed as a tax deduction when paid to employees. g) Doubtful debts expense cannot be claimed as a tax deduction until a bad debt is written off. h) Include in other expenses is an amount of $5000 for goodwill impairment write off i) The tax rate for the year ended 30 June 2021 is 30% Required: Using the methods prescribed by AASB 112 i.e., the balance sheet' approach. 1. Calculate the taxable income of Winter Ltd for the year ended 30 June 2021. [5 marks] 2. Prepare the Journal entry to record the current tax liability for 2021. [2 marks] 3. Prepare a deferred tax worksheet for the 2021 year. [13 marks] 4. Prepare the journal entries to record any deferred tax assets and liabilities at 30 June 2021. [5 marks] Winter Ltd commenced operation on 1 July 2020 and prepared its first financial statements for the year ended 30 June 2021. The following information has been provided: Profit before tax for the year ended 30 June 2021 was calculated as follows: Gross Profit Less: Expenses: Long Service Leave Depreciation Plant and Equipment Salaries and Wages Warranty Claims Amortisation of Research and Development Insurance Doubtful Debts Expense Other Expenses Total expenses Profit before tax Balance Sheet items as at 30 June 2021: Details Assets: 335 Cash Inventories Accounts Receivable Less Allowance for Doubtful Debts Prepaid Insurance Plant and Equipment Less Accumulated Depreciation Research and Development Less Accumulated Amortisation Goodwill (net) Liabilities: Accounts Payable Provision for Warranty Claims Provision for Long Service Leave Loan Payable 10,000 135,000 99,000 36,000 180,000 18,000 20,000 370,000 $. 162,000 20000 540,000 135,000 600,000 180,000 $1,480,000 868,000 612,000 $ 4,000 144,000 142,000 7,200 405,000 420,000 50,000 290,000 27,000 10,000 577/200 Additional Information: a) Tax deductions for warranty expenses are only available when claims are paid b) Insurance expense is an allowable tax deduction when paid in cash c) The company can claim a tax deduction of 125% on research and development expenditure paid. There are no accrued salaries and wages at 30 June 2021 e) For accounting purposes, Winter Ltd. depreciates the cost of Plant and Machinery over four f) Long Service Leave can only be claimed as a tax deduction when paid to employees. g) Doubtful debts expense cannot be claimed as a tax deduction until a bad debt is written off. h) Include in other expenses is an amount of $5000 for goodwill impairment write off i) The tax rate for the year ended 30 June 2021 is 30% Required: Using the methods prescribed by AASB 112 i.e., the balance sheet' approach. 1. Calculate the taxable income of Winter Ltd for the year ended 30 June 2021. [5 marks] 2. Prepare the Journal entry to record the current tax liability for 2021. [2 marks] 3. Prepare a deferred tax worksheet for the 2021 year. [13 marks] 4. Prepare the journal entries to record any deferred tax assets and liabilities at 30 June 2021. [5 marks]
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Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
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