Question 5 SHOW YOUR WORKINGS FOR EACH SECTION (11 marks)

a) Give one example of temporary differences that create a deferred tax asset. (1.5 marks)

b) Give one example of temporary differences that create a deferred tax liability. (1.5 marks)

c) Matrix Ltd purchased a machine on 1 July 2022 at a cost of $300,000. The machine is expected to have a useful life of 3 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2023 is $400,000. The tax rate is 30%. Required:

i) Calculate the companys taxable profit and hence its tax payable for 2023. (2.5 marks)

ii) Determine the deferred tax liability or deferred tax asset that will result. (2.5 marks)

iii) Prepare the necessary journal entries at 30 June 2023. (3 marks)