Provide the journal entries to record the transaction

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Reference no: EM131818830

Green lands Ltd is an entity that is contracted by the mines to dispose off nuclear waste. The entity is renting a piece of land from the City of Windhoek and is required to restore the site to its original condition at the end of 20 years.

The entity estimated that it will spend $35 000 on the restoration of the site after 20 years. Brown Ltd started operations on 1 July2008. It is expected that the provision will not be deductible for tax purposes when paid. The tax rate is 35% and a nominal after tax discount rate of 6.5% p. a.

The receiver of revenue allows a deduction of 30;30;10;10;10;10 on the asset, including the restoration asset.

Depreciation is provided on a straight line basis for 20 years.

The actual cost of restoration amounted to $37million in 2028.

Assume that this is the only transaction giving rise to temporary differences.

Required:

Provide the journal entries to record the transaction in the books of Green lands Ltd for the year ended 30 June 2009, 30 June 2010 and the entry to pay the restoration cost on 30 June 2028.

Reference no: EM131818830

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