1. Deferred tax asset of a loss making company Isa Ltd is a gold exploration company. Isa Ltd has recognised a deferred tax asset balance for tax losses in its statement of financial position for each of the past four years as follows. Isa Ltd ($000s) 2023 2024 2025 2026 Deferred tax asset 24 200 133 200 197 000 300 800 Isa Ltd received a government grant at the beginning of 2027. At 30 April 2027, Isa Ltd identified a gold mine which would generate profit $3,500,000 from 2028 for the following 10 consecutive years. Isa Ltd incured a further loss $900,000 in 2017. Required a) The accountant of Isa Ltd have asked for your advice on whether a deferred tax asset should be recognised for carried forward tax losses at 30 June 2027. Discuss with reference to AASB 112/IAS 12. b) How would the government grant affect the calculation of carry-forward tax losses?

1. Deferred tax asset of a loss making company Isa Ltd is a gold exploration company. Isa Ltd has recognised a deferred tax asset balance for tax losses in its statement of financial position for each of the past four years as follows. Isa Ltd ($000s) 2023 2024 2025 2026 Deferred tax asset 24 200 133 200 197 000 300 800 Isa Ltd received a government grant at the beginning of 2027. At 30 April 2027, Isa Ltd identified a gold mine which would generate profit $3,500,000 from 2028 for the following 10 consecutive years. Isa Ltd incured a further loss $900,000 in 2017. Required a) The accountant of Isa Ltd have asked for your advice on whether a deferred tax asset should be recognised for carried forward tax losses at 30 June 2027. Discuss with reference to AASB 112/IAS 12. b) How would the government grant affect the calculation of carry-forward tax losses?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Exercise 19-02 (Part Level Submission) The following information is available for Martinez Corporation for 2019 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $40,400. This $40,400 difference will reverse equally over the years 2020–2023. 2. Deferral, for book purposes, of $19,900 of rent received in advance. The rent will be recognized in 2020. 3. Pretax financial income, $284,700. 4. Tax rate for all years, 20%.
Question 1 At 30 June 2019, Beta Ltd had the following deferred tax balances: Deferred tax liability $18,000 Deferred tax asset 15,000 Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items: Depreciation expense – plant $7,000 Doubtful debts expense 3,000 Long-service leave expense 4,000 For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020: Tax depreciation – plant $8,000 Bad debts written off 2,000 Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies. Required: a) Determine the taxable income and income tax payable for the year to 30 June 2020. b) Determine by what amount the balances of the deferred liability and deferred tax asset will increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and long-service leave. c) Prepare the necessary journal entries to account for income tax…
None
17. Kiwi Corporation reports the following information: • Correction of overstatement of depreciation expense in prior years, net of tax- P215,000 • Dividends declared- P160,000 • Net income- P500,000 • Retained earnings, 1/1/21, as reported- P1,000,000 Kiwi should report retained earnings, December 31, 2021 at a. P1,555,000. b. P1,340,000. c. P1,125,000. d. P785,000.
None
On December 31, 2022, Big Bear Corporation reports liabilities with a tax basis of $1,200,000 and a book basis of $1,700,000. There was no difference in the asset basis. The difference in liability basis arose from temporary differences that would reverse in the following years: 2023 $120,000 2024 $110,000 2025 $112,000 2026 $80,000 2027 $78,000 Assuming a tax rate of 40% for 2022 - 2025 and a rate of 45% for 2026 - 2027, what should Big Bear report on its balance sheet on December 31, 2022? Group of answer choices deferred tax liability of $200,000 deferred tax asset of $207,900 deferred tax liability of $207,900 deferred tax asset of $200,000
n 20X6, CICO has unrecognized tax losses of $500, 000. In 20X7, the company has additional losses of $100, 000. However, the assessment is that $250, 000 of losses will probably be realized in the future. The current tax rate is 30% and the enacted rate of 20X8 is 28%. What is the entry required in 20X7. Multiple Choice a) Dr. Deferred tax asset $30, 000; Cr. Income tax expense (recovery) $30, 000 b) Dr. Deferred tax asset $70, 000; Cr. Income tax expense (recovery) $70, 000 c) Dr. Deferred tax asset $77, 000; Cr. Income tax expense (recovery) $77, 000 d) Dr. Deferred tax asset $70, 000; Cr. Retained earnings $70, 000
vi.8
vi.2
A domestic corporation has the following data Excess tax credits from 2022 PHP 150,000 For the year 2023: 1st QTR 2nd QTR Income, net of 1% EWT PHP 4,950,000 PHP 7,920,000 Deductions PHP 4,600,000 PHP 7,000,000 How much is the income tax payable in the 2nd Qtr? PHP 350,000 PHP 29,440 PHP 14,000 PHP 70,000
d. Compute for the total income tax expense for years 2020, 2021, 2022, and 2023. e. Compute for the years 2020, 2021, 2022, and 2023.
Give me correct answer with explanation