The following information was extracted from the records of Johnny Co as at 30 June 2020....
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The following information was extracted from the records of Johnny Co as at 30 June 2020. Carrying amount ($) 720,000 262,500 45,000 (86,000) (15,000) (54,000) Asset (liability) Machinery Accounts receivable Prepaid rent Provision for warranty Insurance payable Deposit received in advance Tax base ($) 600,000 322,500 Depreciation rate for machinery is 20% per year. For tax purpose, the depreciation rate is 25%. An allowance for doubtful debts of $60,000 has been raised against accounts receivable for accounting purposes, but such debts are deductible only when written off as uncollectible. Deposits are taxable when received, and warranty costs are deductible when paid. Deferred tax assets and deferred tax liabilities as at 30 June 2019 were $35,000 and $31,250 respectively. The tax rate is 30%. a) 0 0 0 0 Requirement: Calculate Deferred Tax Assets and Deferred Tax Liabilities as at 30 June 2020. Show your calculations by creating columns for carrying amount, tax base, assessable temporary difference, and deductible temporary difference in your worksheet. Prepare the relevant journal entries as at 30 June 2020. Justify your classification of each difference as either deductible temporary difference or taxable temporary difference for: i. Machinery, and ii. Accounts receivable b) c) The following information was extracted from the records of Johnny Co as at 30 June 2020. Carrying amount ($) 720,000 262,500 45,000 (86,000) (15,000) (54,000) Asset (liability) Machinery Accounts receivable Prepaid rent Provision for warranty Insurance payable Deposit received in advance Tax base ($) 600,000 322,500 Depreciation rate for machinery is 20% per year. For tax purpose, the depreciation rate is 25%. An allowance for doubtful debts of $60,000 has been raised against accounts receivable for accounting purposes, but such debts are deductible only when written off as uncollectible. Deposits are taxable when received, and warranty costs are deductible when paid. Deferred tax assets and deferred tax liabilities as at 30 June 2019 were $35,000 and $31,250 respectively. The tax rate is 30%. a) 0 0 0 0 Requirement: Calculate Deferred Tax Assets and Deferred Tax Liabilities as at 30 June 2020. Show your calculations by creating columns for carrying amount, tax base, assessable temporary difference, and deductible temporary difference in your worksheet. Prepare the relevant journal entries as at 30 June 2020. Justify your classification of each difference as either deductible temporary difference or taxable temporary difference for: i. Machinery, and ii. Accounts receivable b) c)
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Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
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