Additional Information: a) Rent revenue is tax assessable when it is received in cash b) Government grant
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Question:
Additional Information: | ||||||||
a) | Rent revenue is tax assessable when it is received in cash | |||||||
b) | Government grant is not tax assessable | |||||||
c) | Doubtful debts are tax deductible when the company actually incurs bad debts/write offs | |||||||
d) | For accounting purposes, plant is depreciated using the straight line method at a rate of: | 10% | per annum | |||||
For tax purposes, however, plant is depreciated at a rate of: | 15% | per annum | ||||||
e) | Depreciation of buildings and entertainment expense are not allowed as tax deductions | |||||||
f) | Employee entitlements including annual leave are tax deductible when they are paid in cash to the employees | |||||||
g) | Insurance expense is tax deductible when it is paid in cash | |||||||
h) | Warranty expense is tax deductible when it is paid in cash | |||||||
i) | Aggregated turnover for the years ended 30 June 2019 and 2020 is in excess of $25 million and it is expected that turnover will exceed $50 million in the year ended 30 June 2021 | |||||||
Required: | ||||||||
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) | Using Sheet 3 ("Calculating DTA_DTL 2020"), calculate the Deferred Tax Asset and Deferred Tax Liability balances as at 30th June 2020 - show all relevant workings. Prepare the deferred tax journal entry for the year ended 30th June 2020. Note that you are NOT required to prepare a journal entry to offset the Deferred Tax Asset and Deferred Tax Liability balances. () | |||||||
3) | Assume that by 1 December 2020 there was a change in tax rate | from: | 30% | |||||
to: | 27.50% | |||||||
Using Sheet 4 ("Change in Tax Rate") briefly discuss the accounting treatment under accounting standard AASB112 "Income Taxes" for the Deferred Tax Asset and Deferred Tax Liability balances as at 1 December 2020 given that the company may now be in a lower tax threshold for the 2020-2021 financial year (maximum 100 words in the space provided). | ||||||||
Should you believe an accounting change is necessary, prepare the journal entry to record the effect of the change in tax rate. () | ||||||||
Note that the opening balances of DTA and DTL for the year ended 30 June 2021 are the closing balances for the year ended 30 June 2020 from part (b) | ||||||||
In each of the four sheets, you can only enter data (text or numbers) in cells shaded in yellow. | ||||||||
All marks will be awarded to numbers only, except for the discussion in Part (c). |
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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