Calculate the company taxable profit

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Question - Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years.

The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%.

Required -

(a) Calculate the company's taxable profit and hence its tax payable for 2017.

(b) Determine the deferred tax liability and/or deferred tax asset that will result.

(c) Prepare the necessary journal entries on 30 June 2017.

Reference no: EM132681750

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