The chief financial officer of Lost Weekend Ltd has asked you to calculate the taxable income and prepare the journal entry for the current tax liability in each of the following four cases.

Assume a tax rate of 30%.

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Accounting profit (loss) After debiting as expense: Goodwill impairment loss* Entertainment costs* Donation to political party* Depreciation expense - plant Long-service leave expense For tax purposes: Tax depreciation for plant Long-service leave paid *These items are non-deductible for tax purposes. Case 1 $40 000 6 000 1 000 4 000 600 8 000 Case 2 $20 000 - 6 000 3 000 2 000 600 4 000 Case 3 $5 000 - 7 000 - 10 000 600 20 000 Case 4 $(10 000) 8 000 2 000 1 200 4 000 2 400 Accounting profit (loss) After debiting as expense: Goodwill impairment loss* Entertainment costs* Donation to political party* Depreciation expense - plant Long-service leave expense For tax purposes: Tax depreciation for plant Long-service leave paid *These items are non-deductible for tax purposes. Case 1 $40 000 6 000 1 000 4 000 600 8 000 Case 2 $20 000 - 6 000 3 000 2 000 600 4 000 Case 3 $5 000 - 7 000 - 10 000 600 20 000 Case 4 $(10 000) 8 000 2 000 1 200 4 000 2 400

Answer rating: 100% (QA)

Case 1 Current Tax Worksheet Profit before income tax 40 000 Add Goodwill impairment loss 6 000 Dona... View the full answer