Lin Ltd reported a Profit before Income Tax Expense of $2,900,000 for the year ending 30 June 2020.

Additional Information

1. On 30 June 2019, machinery was recognised in Lin Ltd’s accounts at cost of $1,500,000, less accumulated depreciation of $450,000. For income tax purposes, the accumulated depreciation at 30 June 2019 was $620,000.

         During the year ending 30 June 2020, Lin Ltd recognised depreciation expense of $150,000 for accounting purposes, and $120,000 for income tax purposes.

2. On 30 June 2019, the balance of the provision for warranty expenditure in Lin Ltd’s accounts was $280,000. During the year ending 30 June 2020, Lin Ltd provided an additional $410,000 for warranty expenditure, and paid warranty expenditure of $320,000. For income tax purposes, warranty expenditure is deductible when it is paid.

3. During the year ending 30 June 2020, Lin Ltd incurred entertainment costs of $160,000. For income tax purposes, entertainment expenses are not deductible.

4. The company income tax rate is 30%.

REQUIRED:

1. Calculate taxable income and income tax payable for Lin Ltd for the year ending 30 June 2020. Show all workings necessary to derive your answer.

Answer rating: 100% (QA)

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