The profit before tax of Perfect Skin Ltd for the year ended 30 June 2017 is $600
Question:
The profit before tax of Perfect Skin Ltd for the year ended 30 June 2017 is $600 000 and includes the following revenue and expense items:
Extracts from the statements of financial position of the company at 30 June 2017 and 30 June 2016 showed the following assets and liabilities:
Additional information
? Entertainment costs and depreciation of buildings are not allowed as tax deductions. The buildings are also not subject to capital gains tax. The government grants revenue is not assessable for tax purposes.
? Accumulated depreciation of plant for tax purposes was $315 000 at 30 June 2016, and depreciation for tax purposes for the year ended 30 June 2017 amounted to $75 000.
? Office supplies are claimed as a tax deduction when purchased. Rent is taxed when received.
? Assume a tax rate of 30% for the year ended 30 June 2017.
A. Prepare a current tax worksheet for the year ended 30 June 2017 to calculate taxable income and the company?s current tax liability, and then record the entries for current tax.
B. Prepare a deferred tax worksheet as at 30 June 2017 to calculate the end-of-period adjustments required for the deferred tax asset and liability accounts, and then record the entries for deferred tax.
C. Assume that the government decided, after the election in August 2016, to change the income tax rate for the year ended 30 June 2017 from 30% to 35%. Show the impact of the change in the tax rate on the journal entries prepared under requirements A and B, and prepare any additional entries that may be required.
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett