Victory Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the...
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Victory Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. Gross profit Wages expense Long service leave expense Bad debts expense Rent expense Depreciation expense - machinery Accounting profit before tax Assets Cash Assets and liabilities as disclosed in the statement of financial position as at 30 June 2021 Inventories Accounts receivables (net) Prepaid rent Statement of comprehensive income for the year ended 30 June 2021 Machinery Accumulated depreciation - machinery Liabilities Accounts payable Revenue received in advance Loan payable Provision for long service leave $ 500 000 (200 000) (50000) (20000) (50000) (30000) 150 000 $150000 200 000 180 000 50 000 150 000) (30 000 700 000 100 000 50 000 200 000 50 000 400 000 Additional information • The company tax rate is assumed to be 30%. • All salaries have been paid as at year end and are deductible for tax purposes. None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid. • Rent was paid in advance on 1 July 2020. Actual amounts paid are allowed as a tax deduction. • Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off. • The revenue received in advance is included in the taxable income. • The machinery is depreciated on a straight-line basis over 5 years for accounting purposes, but over 3 years for taxation purposes. The machinery is not expected to have any residual value. How to we determine the future deductible amount for machinery? ($100,000) Victory Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. Gross profit Wages expense Long service leave expense Bad debts expense Rent expense Depreciation expense - machinery Accounting profit before tax Assets Cash Assets and liabilities as disclosed in the statement of financial position as at 30 June 2021 Inventories Accounts receivables (net) Prepaid rent Statement of comprehensive income for the year ended 30 June 2021 Machinery Accumulated depreciation - machinery Liabilities Accounts payable Revenue received in advance Loan payable Provision for long service leave $ 500 000 (200 000) (50000) (20000) (50000) (30000) 150 000 $150000 200 000 180 000 50 000 150 000) (30 000 700 000 100 000 50 000 200 000 50 000 400 000 Additional information • The company tax rate is assumed to be 30%. • All salaries have been paid as at year end and are deductible for tax purposes. None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid. • Rent was paid in advance on 1 July 2020. Actual amounts paid are allowed as a tax deduction. • Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off. • The revenue received in advance is included in the taxable income. • The machinery is depreciated on a straight-line basis over 5 years for accounting purposes, but over 3 years for taxation purposes. The machinery is not expected to have any residual value. How to we determine the future deductible amount for machinery? ($100,000)
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Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
Posted Date:
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