Exercise 6.

CALCULATION OF DEFERRED TAX, AND PRIOR YEAR AMENDMENT

Jasmine Ltd
1. Journal entry to record 2013 amendment 30 June 2014 Income tax expense Deferred tax asset

Dr Cr

1 350 1 350

2. JASMINE LTD Current Tax Worksheet (for year ended 30 June 2014) Accounting profit Add: Entertainment expense (non-deductible) Carrying amount plant Depreciation expense plant Doubtful debts expense Insurance expense Annual leave expense Deduct: Government grant (exempt) Carrying amount taxation Depreciation taxation Bad debts written off Insurance paid Annual leave paid Taxable income Add back exempt income Less recoupment of tax loss Taxable income Current tax liability @ 30%
Journal entry: Income tax expense (current) Deferred tax asset (tax losses) Current tax liability Dr Cr Cr 12 222 4 170 8 052

$22 240 $11 100 30 000 24 000 8 100 12 900 15 400 3 600 26 000 28 800 6 500 10 700 11 000

101 500 123 740

(86 600) 37 140 3 600 40 740 (13 900) 26 840 $8 052

4. Jasmine Ltd Deferred tax worksheet (extract) as at 30 June 2014 Future Future Tax Base Taxable Taxable Deductible Temporary Amount Amount Differences $ $ $ $ (0) 6 800 156 000 (105 600) *78 720 78 720 26 880

Carrying Amount $ 149 200 105 600

Accounts Receivable Plant

Deductible Temporary Differences $ 6 800

Exercise 6.9

CURRENT AND DEFERRED TAX WITH TAX RATE CHANGE

Fennel Ltd
1. Change in tax rate Adjusting journal entry: Deferred Tax Liability Deferred Tax Asset Income Tax Income (being recognition of change of tax rate) Dr Cr Cr 18 000 7 400 10 600

2. Current Tax Worksheet (for year ended 30 June 2013) Accounting profit Add: Impairment - goodwill Amortisation development expenditure Depreciation - buildings Depreciation - plant Warranty expense Doubtful debts expense Long service leave expense Deduct: Exempt income Bad debts written off Warranty repairs paid Development costs additional deduction $920 000 $20 000 64 000 29 000 70 000 20 000 15 000 8 000

226 000 1 146 000

126 000 14 000 22 000 30 000

Development costs paid Depreciation - plant (tax) Taxable income Current tax liability @ 30%

120 000 105 000

(417 000) 729 000 $218 700

Carrying Amount $ Relevant Assets Receivables Plant Buildings Development Costs Relevant Liabilities Provision for Warranty Provision for Long service leave Total Temporary Differences Exempt differences Temporary differences Deferred tax liability Deferred tax asset Beginning balances Movement during year Adjustment

Fennel Ltd Deferred tax worksheet as at 30 June 2013 Future Future Tax Base Taxable Taxable Deductible Temporary Amount Amount Differences $ $ $ $

Deductible Temporary Differences $

222 000 410 000 701 000 176 000

(0) (410 000) (701 000) (176 000)

13 000 315 000 0 0

235 000 315 000 0 0

13 000 95 000 701 000 176 000

32 000 36 000

0 0

(32 000) (36 000)

0 0

32 000 36 000

972 000 (701 000) 271 000 81 300

81 000 81 000

24 300 (72 000) *18 000 27 300 Cr (29 600) *7 400 2 100 Dr

(* Tax rate change September 08)

Exercise 6.11 CURRENT AND DEFERRED TAX 1. Lily Ltd Current Tax Worksheet for year ended 30 June 2013 Accounting profit Add: Entertainment expense (non-deductible) Depreciation motor vehicle Depreciation equipment Doubtful debts expense Annual leave expense Carrying amount equipment Rent received (tax) Deduct: Royalty revenue (non-assessable) Rent revenue Depreciation of equipment for tax Bad debts written off Annual leave paid Carrying amount equipment (tax) Taxable income Current tax liability @ 30% $18 500 $1 500 4 500 20 000 2 300 5 000 18 000 15 600 5 000 16 000 15 000 1 800 6 500 21 000

66 900

(65 300) 20 100 $6 030

Carrying Amount $ Relevant Assets Receivables Rent receivable Motor vehicle Equipment Relevant Liabilities Annual leave provision Total Temporary differences

Lily Ltd Deferred Tax Worksheet as at 30 June 2013 Future Future Tax Base Taxable Taxable Deductible Temporary Amount Amount Differences $ $ $ $

Deductible Temporary Differences $

9 000 2 800 2 250 40 000

(0) (2 800) (2 250) (40 000)

3 000 0 0 55 000

12 000 0 0 55 000

3 000 2 800 2 250 15 000

4 500

(4 500)

4 500

5 050

22 500

Exempt differences Temporary differences Deferred tax liability Deferred tax asset Beginning balances Movement during year Adjustment

5 050 1 515

22 500

6 750 (2 745) (1 230) Dr (6 450) 300 Dr