Background information

The profit before tax, reported in the statement of comprehensive income of Burwood Ltd for the year ended $30$ June $2024$

amounted to: $17,880,000$

Service revenue $558,000$

Prize money $1,005,000$

Doubtful debts expense $111,000$

Depreciation $($Vehicle$)581,040$

Depreciation $($Buildings$)178,000$

Maintenance expense $502,000$

Warranties expense $335,000$

Insurance expense $167,000$

Government issued fine $279,300$

The draft statements of financial position of the company at $30$ June $2024$ and $2023$ showed the following assets and liabilities:

$2024($$$)2023($$$)$

Assets

Cash $1,173,0001,285,000$

Inventory $2,514,0002,290,000$

Accounts receivable $7,263,0006,928,000$

Allowance for doubtful debts $-581,000-536,000$

Prepaid insurance $312,000290,000$

Vehicle $7,263,0007,263,000$

Accumulated depreciation $-$ Vehicle $-4,648,320-4,067,280$

Buildings $4,470,0004,470,000$

Accumulated depreciation $-$ Buildings $-1,788,000-1,609,000$

Land $2,793,0002,793,000$

Patents $1,117,0001,117,000$

Deferred tax asset $?797,646$

Liabilities

Accounts payable $4,246,0003,799,000$

Provision for maintenance $894,000670,000$

Provision for warranties $614,000447,000$

Service revenue received in advance $391,000279,000$

Deferred tax liability $?0$

Additional Information:

Service revenue is tax assessable when it is received in cash

Prize money is not tax assessable

Doubtful debts are tax deductible when the company actually incurs bad debts$/$write off

For accounting purpose, the vehicle is depreciated using the annual straight line method at a rate of: $8\%$

For tax purpose, however, the vehicle is depreciated using the annual straight line method at a rate of: $6\%$

Depreciation of buildings is not allowed as tax deductions and patents are not tax assesable

Warranties are tax deductible when they are paid in cash to affected customers

insurance expense and maintenance expense are tax deductible when paid in cash

Government issued fine is not allowed as tax deduction

Assume a tax rate for the financial years ending $30$ June $2023$ and $2024$ to be: $30\%$

Required:

Calculate the taxable income$/$tax loss and the current tax liability $($if any$)$ for the financial year ended $30$ June $2024.$

Prepare a journal entry to recognise the current tax liability$/$tax loss.

Calculate deferred tax asset and deferred tax liability balances as at $30$ June $2024.$

Prepare the deferred tax journal entries for the year ended $30$ June $2024.$

Note that you are NOT required to prepare journals to offset the deferred tax asset and deferred tax liability balances.

Show your calculation using deferred tax worksheets by creating separate columns for:

carrying amount, tax base, taxable temporary differences and deductible temporary differences.

Assume that by $1$ December $2024$ there was a change in tax rate to: $27\mathrm{.}50\%$

With reference to AASB$112$ Income Taxes, discuss the accounting treatment of the deferred tax asset and deferred tax liability

balances as at $1$ December $2024$ following a lower tax threshold for the $2024-2025$ financial year.

Prepare the journal entries to record the effect of change in tax rate.

a$)$ Calculate the taxable income$/$tax loss and the current tax liability $($if any$)$ for the financial year ended $30$th June $2024.$ Prepare a journal entry to recognise the current tax liability$/$tax loss and show workings.

b$)$ Calculate deferred tax asset and deferred tax liability balances as at $30$th June $2024.$ Prepare the deferred tax journal entries for the year ended $30$th June $2024.$ Show workings

c$)$ Assume that by $1$ December $2024$ there was a change in tax rate to: $27\mathrm{.}50\%$

With reference to AASB$112$ Income Taxes, discuss the accounting treatment of the deferred tax asset and deferred tax liability balances as at $1$ December $2024$ following a lower tax threshold for the financial year $2024-2025.$ Prepare the journal entries to record the effect of change in tax rate. Show workings