The preliminary annual accounts of X company show a profit before tax of USD 15 000...

 

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The preliminary annual accounts of X company show a profit before tax of USD 15 000 000. Other operating expenses include USD 200 000 in non-deductible representation expenses and the expensing of the provision for legal proceedings of USD 300,000 described below. The tax assessment for 2019 showed an assessed tax of USD 2 156 000. Extract from the balance sheet shows: All figures in whole USD. Credit items are shown in minus sign. Equity and liabilities 31.12.2019 Share capital -2 500 000 Other equity -8 000 000 Deferred tax-187 000 Dividends 0 Taxes payable -2 100 000 31.12.2020: 31.12.2020 -2 500 000 -8 000 000 Accounting item Trade receivables 0 The tax rate is 22% for both 2019 and 2020. The following information is available as a basis for calculating temporary differences as at 0 Accounting value Tax value 3 500 000 3 550 000 Inventories 2 750 000 2 200 000 Tangible fixed assets 1 000 000 700 000 0 Provision for legal proceedings -300 000 A customer has announced legal action against the company as a result of the poorly performed work in 2019. The amount of compensation is uncertain and the trial and judgment is expected at the end of 2020. a) Calculate the tax expense and profit for the year in the income statement and deferred tax, tax payable and other equity in the balance sheet. The preliminary annual accounts of X company show a profit before tax of USD 15 000 000. Other operating expenses include USD 200 000 in non-deductible representation expenses and the expensing of the provision for legal proceedings of USD 300,000 described below. The tax assessment for 2019 showed an assessed tax of USD 2 156 000. Extract from the balance sheet shows: All figures in whole USD. Credit items are shown in minus sign. Equity and liabilities 31.12.2019 Share capital -2 500 000 Other equity -8 000 000 Deferred tax-187 000 Dividends 0 Taxes payable -2 100 000 31.12.2020: 31.12.2020 -2 500 000 -8 000 000 Accounting item Trade receivables 0 The tax rate is 22% for both 2019 and 2020. The following information is available as a basis for calculating temporary differences as at 0 Accounting value Tax value 3 500 000 3 550 000 Inventories 2 750 000 2 200 000 Tangible fixed assets 1 000 000 700 000 0 Provision for legal proceedings -300 000 A customer has announced legal action against the company as a result of the poorly performed work in 2019. The amount of compensation is uncertain and the trial and judgment is expected at the end of 2020. a) Calculate the tax expense and profit for the year in the income statement and deferred tax, tax payable and other equity in the balance sheet.