Solution-Prepare a deferred tax worksheet and the journal

Prepare a deferred tax worksheet and the journal entry

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Reference no: EM132838898

Problem - Calculation of deferred tax, and adjustment entry - The following information was extracted from the records of Jackson Ltd as at 30 June 2020.

	Carrying amount	Tax base
Asset (liability)
Accounts receivable	$150,000	$175,000
Motor vehicles	165,000	125,000
Provision for warranty	(12,000)	0
Deposits received in advance	(15,000)	0

The depreciation rates for accounting and taxation are 15% p.a. and 25% p.a. respectively. Deposits are taxable when received, and warranty costs are deductible when paid. An allowance for doubtful debts of $25,000 has been raised against accounts receivable for accounting purposes, but such debts are deductible only when written off as uncollectable.

Required -

1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify your classification of each difference as either a deductible temporary difference or a taxable temporary difference.

2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for the year ended 30 June 2020 assuming no deferred items had been raised in prior years.

Reference no: EM132838898

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Prepare a deferred tax worksheet and the journal entry

Reference no: EM132838898

Reference no: EM132838898

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