The following information relates to Gary Limited for the year ended 30 June 20X2.

Accounting profit before income tax (after all expenses have been included)	$300 000
Fines and penalties	20 000
Depreciation of plant (accounting)	40 000
Depreciation of plant (tax)	100 000
Long-service leave expense	8 000
Income tax rate	30%

On the basis of this information the current tax liability is:

Select one:

a. $74 400

b. $78 000

c. $80 400

d. $99 600

A Ltd commenced business on 1 July 20X1. On 30 June 20X2, an extract of the financial statement for internal purposes disclosed the following information:

Cash $ 40 000

Inventory 100 000

Plant 300 000

Accounts payable 80 000

Long service leave 5 000

Additional information:

1. The plant was acquired on 1 July 20X1. Depreciation for accounting purposes was 10% (straight-line method), while 15% (straight-line) was used for tax purposes.
2. The tax rate is 30%.

The deferred tax asset is:

Select one:

a. $1 500

b. $4 500

c. $5 000

d. $25 500

Answer rating: 100% (QA)

2 Solution 1 Profit before Tax 300000 Addback Fines and penalties 20000 Depreciation for plant ... View the full answer