White Ltd commenced business on 1 July 2017. An extract of the statement of financial position...

 

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White Ltd commenced business on 1 July 2017. An extract of the statement of financial position of White Ltd for the year ending 30 June 2019 and 2020 are shown below: 2019 $ 3,800 15,000 (600) Assets 2020 $ 5,000 18,000 (880) Cash Accounts receivable Allowance for doubtful debt Dividend receivable 800 380 Inventory Prepaid insurance Interest receivable Machinery Accumulated depreciation-machinery 13,000 3,800 700 14,000 2,000 500 40,000 (12,000) 35,000 500,000 (150,000) 40,000 (4,000) 25,000 500,000 (125,000) 600 Land Building Accumulated depreciation- building Deferred tax asset Liabilities Accounts payable Current tax liability Provision for Warranty Interest payable Debentures Dividend payable Deferred tax liability 2,000 350 600 3,000 400 700 900 17,000 5,000 1,200 15,000 5,000 200 Additional information: 1. Depreciation for accounting and tax purposes are 20% and 25% straight-line method, respectively. 2. Depreciation for building is non-deductible for tax purpose. 3. Bad debt expense for the year ended 2020 amounted to $350. 4. A payment of $3,000 was made to Rail Insurance Ltd. 5. Interest income recognized for the year ended 2020 is $700. 6. Land was revalued to its fair value in 2020. 7. Warranty and interest expenses for the current period are $250 and $300, respectively. 8. Half of the deferred tax asset amount is due to tax loss in 2019, which will be recouped in 2020. 9. The accounting profit before tax for the year ended 30 June 2020 is $38,000. 10. There are no other differences between accounting profit before tax and taxable income to account for. 11. The tax rate is 30%. Required: Prepare a deferred tax worksheet for the year ended 30 June 2020, and associated joumal entries in accordance to IAS 12/AASB 112 Income Taxes. (25 marks) White Ltd commenced business on 1 July 2017. An extract of the statement of financial position of White Ltd for the year ending 30 June 2019 and 2020 are shown below: 2019 $ 3,800 15,000 (600) Assets 2020 $ 5,000 18,000 (880) Cash Accounts receivable Allowance for doubtful debt Dividend receivable 800 380 Inventory Prepaid insurance Interest receivable Machinery Accumulated depreciation-machinery 13,000 3,800 700 14,000 2,000 500 40,000 (12,000) 35,000 500,000 (150,000) 40,000 (4,000) 25,000 500,000 (125,000) 600 Land Building Accumulated depreciation- building Deferred tax asset Liabilities Accounts payable Current tax liability Provision for Warranty Interest payable Debentures Dividend payable Deferred tax liability 2,000 350 600 3,000 400 700 900 17,000 5,000 1,200 15,000 5,000 200 Additional information: 1. Depreciation for accounting and tax purposes are 20% and 25% straight-line method, respectively. 2. Depreciation for building is non-deductible for tax purpose. 3. Bad debt expense for the year ended 2020 amounted to $350. 4. A payment of $3,000 was made to Rail Insurance Ltd. 5. Interest income recognized for the year ended 2020 is $700. 6. Land was revalued to its fair value in 2020. 7. Warranty and interest expenses for the current period are $250 and $300, respectively. 8. Half of the deferred tax asset amount is due to tax loss in 2019, which will be recouped in 2020. 9. The accounting profit before tax for the year ended 30 June 2020 is $38,000. 10. There are no other differences between accounting profit before tax and taxable income to account for. 11. The tax rate is 30%. Required: Prepare a deferred tax worksheet for the year ended 30 June 2020, and associated joumal entries in accordance to IAS 12/AASB 112 Income Taxes. (25 marks)

Answer rating: 100% (QA)

O Answer and explanations 1 The Reported Net Income as per financial statements for the year ended 3... View the full answer