On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star for the two years to 2019 are as follows: Data provided in the image. RequiredCalculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019. b) Prepare the required tax journal entries for each year. On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relfor the two years to 2019 are as follows:20192018Profit before tax$4 500 000$3 600 000Warranty expense1500 000Depreciation expense – machinery60 00060 000Gain on sale of machinery for accounting||Warranty paid750 000-Tax depreciation – machinery90 00090 000Gain on sale of machinery for tax-|750 0001500 000Provision for warranty – carrying amountProvision for warranty – tax base-Machinery – carrying amount180 000240 000Machinery – tax base120 000210 000The company tax rate is 30%.

Step 1 Journal is the part of book keeping.

Answered: On 1 July 2017, Bright Star Ltd was…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star for the two years to 2019 are as follows: Data provided in the image. Required
Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019. b) Prepare the required tax journal entries for each year.

On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other rel
for the two years to 2019 are as follows:
2019
2018
Profit before tax
$4 500 000
$3 600 000
Warranty expense
1500 000
Depreciation expense – machinery
60 000
60 000
Gain on sale of machinery for accounting
|
|
Warranty paid
750 000
-
Tax depreciation – machinery
90 000
90 000
Gain on sale of machinery for tax
-
|
750 000
1500 000
Provision for warranty – carrying amount
Provision for warranty – tax base
-
Machinery – carrying amount
180 000
240 000
Machinery – tax base
120 000
210 000
The company tax rate is 30%.

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