Dalen Ltd prepared a draft statement of profit and loss (P/L) for the year ended 30...

  

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Dalen Ltd prepared a draft statement of profit and loss (P/L) for the year ended 30 June 2019 which showed a profit before tax of $24 420. The P/L included the following items of income and expense: Government grant (exempt from tax) 5 000 23 000 Proceeds on sale of plant Bad debts expense Depreciation expense - plant 8 100 14 000 Insurance expense 12 900 Long-service leave expense Impairment of goodwill Carrying amount of plant sold 14 500 11 100 20 000 The statements of financial position of DaJen Ltd at 30 June 2019 and 30 June 2018 include the following assets and liabilities: DAJEN LTD Statement of Financial Position (Extract) as at 30 June 2019 2018 Assets 18 000 85 000 (5 200) 5 600 Cash $ 6 000 Accounts receivable Allowance for doubtful debts Prepaid insurance Plant 96 000 (6 800) 3 400 140 000 170 000 Accumulated depreciation - plant Goodwill Accumulated impairment losses Deferred tax asset (32 000) 22 200 (28 000) 22 200 (11 100) ? 9 540 Liabilities 78 000 13 200 Accounts payable Provision for long-service leave Current tax liability Deferred tax liability 76 000 9 700 ? 3780 Additional information (а) For tax purposes the carrying amount of plant sold was $15 000. The tax deduction for plant depreciation was $20 250. The accumulated depreciation on plant for tax purposes at 30 June 2019 is $40 250 (2018: $35 000). (b) In the year ended 30 June 2018, the company recorded a tax loss. At 1 July 2018 carry forward tax losses amounted to $16 900. The company recognised a deferred tax (c) asset in respect of these tax losses at 30 June 2018. (d) Tax losses carried forward must be offset against any exempt income before being used to reduce taxable income. The (e) company does not set off deferred tax liabilities and assets and the corporate tax rate is 30%. Required Prepare the current tax worksheet for the year ended 30 June 2019 and the tax journal entries. А. 11 marks В. Prepare the deferred tax worksheet as at 30 June 2019 and the tax journal entries. 15 marks С. Discuss the factors the company should have considered before recognising a deferred tax asset with respect to the tax loss incurred in the year ended 30 June 2018? 4 marks Dalen Ltd prepared a draft statement of profit and loss (P/L) for the year ended 30 June 2019 which showed a profit before tax of $24 420. The P/L included the following items of income and expense: Government grant (exempt from tax) 5 000 23 000 Proceeds on sale of plant Bad debts expense Depreciation expense - plant 8 100 14 000 Insurance expense 12 900 Long-service leave expense Impairment of goodwill Carrying amount of plant sold 14 500 11 100 20 000 The statements of financial position of DaJen Ltd at 30 June 2019 and 30 June 2018 include the following assets and liabilities: DAJEN LTD Statement of Financial Position (Extract) as at 30 June 2019 2018 Assets 18 000 85 000 (5 200) 5 600 Cash $ 6 000 Accounts receivable Allowance for doubtful debts Prepaid insurance Plant 96 000 (6 800) 3 400 140 000 170 000 Accumulated depreciation - plant Goodwill Accumulated impairment losses Deferred tax asset (32 000) 22 200 (28 000) 22 200 (11 100) ? 9 540 Liabilities 78 000 13 200 Accounts payable Provision for long-service leave Current tax liability Deferred tax liability 76 000 9 700 ? 3780 Additional information (а) For tax purposes the carrying amount of plant sold was $15 000. The tax deduction for plant depreciation was $20 250. The accumulated depreciation on plant for tax purposes at 30 June 2019 is $40 250 (2018: $35 000). (b) In the year ended 30 June 2018, the company recorded a tax loss. At 1 July 2018 carry forward tax losses amounted to $16 900. The company recognised a deferred tax (c) asset in respect of these tax losses at 30 June 2018. (d) Tax losses carried forward must be offset against any exempt income before being used to reduce taxable income. The (e) company does not set off deferred tax liabilities and assets and the corporate tax rate is 30%. Required Prepare the current tax worksheet for the year ended 30 June 2019 and the tax journal entries. А. 11 marks В. Prepare the deferred tax worksheet as at 30 June 2019 and the tax journal entries. 15 marks С. Discuss the factors the company should have considered before recognising a deferred tax asset with respect to the tax loss incurred in the year ended 30 June 2018? 4 marks

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aPrepare the current tax worksheet as follows Journal entry In the above en... View the full answer