Question 1 At 30 hune 2019, Beta Ltd had the following deferred tax balances: Deferred tan lability Deferred tax asset SI8,000 15,000 Beta Ltd recorded a profit before tax of S80,000 for the year to 30 June 2020, which included the following items: Depreciation expense -plant $7,000 Doubtful debts expense Long service leave expense 4,000 3,000 For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020: Tax depreciation - plant Bad debts written off S8000 2,000 Depreciation rates for taation purposes are higher than for accounting purposes. A corporate tau rate of 3ON applies. Required: a) Determine the taable income and income tax payable for the year to 30 June 2020. b) Determine by what amount the balances of the deferred liability and deferred tax asset will increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and long service leave ) Prepare the necessary journal entries to account for income ta assuming recognition criteria are satisfied d) What are the balances of the deferred tax lability and deferred tax asset at 30 une 20207
Question 1 At 30 hune 2019, Beta Ltd had the following deferred tax balances: Deferred tan lability Deferred tax asset SI8,000 15,000 Beta Ltd recorded a profit before tax of S80,000 for the year to 30 June 2020, which included the following items: Depreciation expense -plant $7,000 Doubtful debts expense Long service leave expense 4,000 3,000 For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020: Tax depreciation - plant Bad debts written off S8000 2,000 Depreciation rates for taation purposes are higher than for accounting purposes. A corporate tau rate of 3ON applies. Required: a) Determine the taable income and income tax payable for the year to 30 June 2020. b) Determine by what amount the balances of the deferred liability and deferred tax asset will increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and long service leave ) Prepare the necessary journal entries to account for income ta assuming recognition criteria are satisfied d) What are the balances of the deferred tax lability and deferred tax asset at 30 une 20207
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter3: Taxes On The Financial Statements
Section: Chapter Questions
Problem 12P
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Transcribed Image Text:Question 1
At 30 hune 2019, Beta Ltd had the following deferred tax balances:
Deferred tan lability
Deferred tax asset
SI8,000
15,000
Beta Ltd recorded a profit before tax of S80,000 for the year to 30 June 2020, which included the
following items:
Depreciation expense -plant $7,000
Doubtful debts expense
Long service leave expense 4,000
3,000
For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:
Tax depreciation - plant
Bad debts written off
S8000
2,000
Depreciation rates for taation purposes are higher than for accounting purposes. A corporate tau rate
of 3ON applies.
Required:
a) Determine the taable income and income tax payable for the year to 30 June 2020.
b) Determine by what amount the balances of the deferred liability and deferred tax asset will
increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and
long service leave
) Prepare the necessary journal entries to account for income ta assuming recognition criteria are
satisfied
d) What are the balances of the deferred tax lability and deferred tax asset at 30 une 20207
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