The accounting profit before tax of John Ltd (John) for the year ended 30 June 2019 was $200 000 after charging all expenses and recognising all items of revenue. The carrying amounts in the books of John of those assets and liabilities relevant to income taxes were as follows:
                                                                                                                  2019                 2018
Equipment                                                                                          ---                         200 000
Accumulated depreciation                                                               ---                       (30 000)
Carrying amount                                                                                ---                       170 000
Goodwill (less allowance for impairment)                                      190 000             160 000
Unearned insurance premiums                                                          54 000              62 000
 
In preparing the tax return of the company, the accountant included the following item.

● Depreciation on equipment            $50 000

Reductions in goodwill are not deductible for tax purposes. The company's effective tax rate was 30 per cent. Assume that the recognition criteria was satisfied.

Required

Prepare journal entry(ies) to recognise the tax consequence of these transactions in accordance with AASB 112. Show workings and calculations.

Answer rating: 100% (QA)

Journal Entry Date General Journal Debit Credit Income tax expenses ac Dr Deferred Tax assets a... View the full answer