Reference no: EM133038061
Question -
PART A - Prepare a current tax worksheet- Relevant information is as follows:
You are required to account for income tax for the year ending 30 June 2021.
Accounting profit before tax $80,000
Non-deductible Fines $6,000
Warranty expense $7,000
Warranty paid $5,000
Depreciation expense $10,000
Depreciation allowed for tax $12,000
Annual leave expense $8,000
Annual leave Paid $3,000
R&D (Asset) paid $5,000
Corporate tax rate 30%
Required - Prepare the current tax worksheet and the current tax journal entry for 30.6.21.
PART B - Prepare income tax adjustment for the following items
1) T Limited accrued $10,000 for warranty expense in the year ended 30 June 2021. This item will not be tax deductible until it is paid. If the company tax rate is 30%. What is the tax effect adjustment on 30 June 2021?
2) B Limited had the following deferred tax balances at reporting date:
deferred tax assets $10,000
deferred tax liabilities $25,000
Effective from the first day of the next financial period, the company rate of income tax was increased from 30% to 25%. What is the tax effect adjustment entry to recognise the impact of the tax rate change?
3) The following information was extracted from the financial records of ABC Limited: equipment purchased on 1 July 2020 for $100 000 (accounting depreciation 10% straight line; tax depreciation 20% straight line). If the company tax rate is 30%, what is the deferred tax adjustment entry that will be recorded by ABC Limited at 30 June 2021?