Narita Ltd commenced business on 1 July 2023. On 30 June 2024, an extract of the...

  

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Narita Ltd commenced business on 1 July 2023. On 30 June 2024, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: Assets Cash Inventories Accounts Receivable Provision for doubtful debts Plant Accumulated depreciation Additional information: Liabilities $ 404,000 Accounts payable 102,000 Provision for annual leave 242,000 Revenue received in advance (52,000) Bank loan 600,000 (120,000) $ 71,000 21,000 7,000 289,500 • The plant was acquired on 1 July 2022. Depreciation for accounting purposes is 10% (straight-line method), while 20% (straight-line) is used for tax purposes. The tax rate is 30%. • The opening balances for DTA and DTL for the period are $20,000 and . $24,000, respectively. Required: i. Fill out the blanks in the following deferred tax worksheet as at 30 June 2024. ii. Prepare journal entries for deferred tax asset and deferred tax liability as at 30 June 2024 (Narrations are not required). i. Assets Cash Inventories Accounts Receivable Provision for doubtful debts Plant Accumulated depreciation Liabilities Accounts payable Provision for annual leave Revenue received in advance Bank loan Temporary differences Deferred tax liability Deferred tax asset Opening Balance Adjustment Carrying amount 404,000 102,000 242,000 (52,000) 600,000 (120,000) 71,000 21,000 7,000 289,500 Tax base Taxable temporary differences Deductible temporary differences ii. Journal entries for the inception of the lease: Date Account Name Debit Credit Narita Ltd commenced business on 1 July 2023. On 30 June 2024, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: Assets Cash Inventories Accounts Receivable Provision for doubtful debts Plant Accumulated depreciation Additional information: Liabilities $ 404,000 Accounts payable 102,000 Provision for annual leave 242,000 Revenue received in advance (52,000) Bank loan 600,000 (120,000) $ 71,000 21,000 7,000 289,500 • The plant was acquired on 1 July 2022. Depreciation for accounting purposes is 10% (straight-line method), while 20% (straight-line) is used for tax purposes. The tax rate is 30%. • The opening balances for DTA and DTL for the period are $20,000 and . $24,000, respectively. Required: i. Fill out the blanks in the following deferred tax worksheet as at 30 June 2024. ii. Prepare journal entries for deferred tax asset and deferred tax liability as at 30 June 2024 (Narrations are not required). i. Assets Cash Inventories Accounts Receivable Provision for doubtful debts Plant Accumulated depreciation Liabilities Accounts payable Provision for annual leave Revenue received in advance Bank loan Temporary differences Deferred tax liability Deferred tax asset Opening Balance Adjustment Carrying amount 404,000 102,000 242,000 (52,000) 600,000 (120,000) 71,000 21,000 7,000 289,500 Tax base Taxable temporary differences Deductible temporary differences ii. Journal entries for the inception of the lease: Date Account Name Debit Credit

Answer rating: 100% (QA)

Lets begin by filling out the blanks in the deferred tax worksheet The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes Taxable temporary differen... View the full answer