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Prepare journal entries to account for income tax

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Bright Ltd started a transportation business in 2018. On 1 January 2019, Bright Ltd purchased Vehicle X for $50,000 cash. Bright Ltd depreciates all items of Property, Plant & Equipment using a straight-line method. Vehicle X is estimated to be used in the delivery operation for 5 years with zero residual value. The depreciation rate allowed by the tax authority is 25% per annum.

Vehicle X was sold to Tree Ltd for $30,000 on 30 June 2021.

Bright Ltd prepares its financial statement on 30 June each year. The company tax rate is 30%.

Required:

Problem 1: Prepare journal entries to account for income tax in relation to Vehicle X on 30 June 2021 in accordance with IAS 12/ AASB 112 Income Taxes. Show ALL workings.

Reference no: EM132975415

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