Calculate the deferred tax liability and deferred tax asset

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Question - On the 30 June 2021 Efficient Ltd had a balance of $198,000 in its deferred tax liability account and $76,000 in its deferred tax asset account. As of 30 June 2022, the taxable temporary differences totalled $720,000 and the deductible temporary differences totalled $330,000. Accounting profit before tax for the year ended 30 June 2022 was $900,000. This profit includes entertainment expense $200,000; government grants $30,000; accounting depreciation $7,500 (tax depreciation $5,500); warranty expense $2,000 (cash payment $1,000). Assume a current tax rate of 30%.

Required -

a) Calculate the current tax liability for the year ended 30 June 2022 and prepare the journal entry to record the current tax in the books.

b) Calculate the deferred tax liability and deferred tax asset on 30 June 2022 and prepare the journal entry to record the deferred tax amounts.

Reference no: EM133116251

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