Case 2: Calculation of deferred tax, and adjustment entry (5%)The following information was extracted from the records of Jackson Ltd as at 30 June 2020.Carrying amountTax baseAsset (liability)Accounts receivable$175 000125 000$150 000Motor vehicles165 000Provision for warrantyDeposits received in advance(12 000)(15000)The depreciation rates for accounting and taxation are 15% p.a. and 25% p.a. respectively. Depositsare taxable when received, and warranty costs are deductible when paid. An allowance for doubtfuldebts of $25 000 has been raised against accounts receivable for accounting purposes, but such debtsare deductible only when written off as uncollectable.Required1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify yourclassification of each difference as either a deductible temporary difference or a taxabletemporary difference.2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for the yearended 30 June 2020 assuming no deferred items had been raised in prior years.

Deferred Tax Assets: It shows the amount of advance tax that a company has paid in excess of the…

1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify classification of each difference as either a deductible temporary difference or a ta temporary difference. 2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for th ended 30 June 2020 assuming no deferred items had been raised in prior years.

1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify classification of each difference as either a deductible temporary difference or a ta temporary difference. 2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for th ended 30 June 2020 assuming no deferred items had been raised in prior years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject: acounting
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