At 30 June 2022, Elina Ltd had the following temporary differences:

Asset or liability	Carrying amount ($000)	Tax base ($000)	Temporary difference ($000)
Computers at cost	300	300
Accumulated depreciation	(60)	(100)
Computers—net	240	200	40
Accounts receivable	100	100
Allowance for doubtful debts	(10)	0
Accounts receivable—net	90	100	10
Provision for warranty costs	30	0	30
Provision for employee benefits (LSL)	20	0	20

The following information is available for the following year, the year ending 30 June 2023.

Statement of profit or loss and other comprehensive income for Elina Ltd for the year ending 30 June 2023	$000
Revenue	4 000
Cost of goods sold expense	(1 800)
Depreciation expense	(60)
Warranty expense	(90)
Bad and doubtful debts expense	(25)
Other expenses	(1 375)
Profit before tax	650
Other comprehensive income	Nil

Elina Ltd depreciates computers over five years in its accounting records but over three years for tax purposes. The straight-line method is used. During the year, Elina wrote off bad debts amounting to $15 000. Warranty costs of $70 000 were paid during the year. No amounts were paid for long-service leave during the year. The following information is extracted from the statement of financial position at 30 June 2023:

	$000
Assets
Accounts receivable	120
Allowance for doubtful debts	(20)
Liabilities
Provision for warranty costs	50
Provision for employee benefits (LSL)	30

There was no acquisition of plant and equipment during the year.

The tax rate as at 30 June 2022 and 30 June 2023 was 30 per cent.

1. Calculate the amount of each of Elinas’ temporary differences, if any, at 30 June 2022, and state whether it is deductible or taxable.

2. What is the balance of the deferred tax liability and deferred tax asset, if any, as at 30 June 2022?

3. Prepare journal entries to record current tax and deferred tax for the year ending 30 June 2023

Answer rating: 100% (QA)

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