Plant Accumulated depreciation-Plant Equipment Accumulated depreciation-equipment Wages and salaries payable Provision for long service leave Provision for warranty claims Interest payable 2,100,000 2,100,000 787,500 525,000 750,000 750,000 225,000 150,000 345,000 265,000 355,000 245,000 130,000 115,000 100,000 100,000 Additional Information 1. All depreciable assets were acquired on 1 July 2015. For financial reporting purposes, depreciation is recognised on a straight line basis, over 20 years for buildings (estimated residual value $250,000), eight years for plant and 10 years for equipment. For tax purposes, straight line depreciation is applied over 40, 10 and eight years respectively. 2. After reviewing all relevant information, the directors determined that, at 30 June 2018, the plant was impaired by $250,000 (this is not reflected in the amounts presented in the trial balance). 3. On 30 June 2018, after careful consideration, the directors of Bula Island Ltd decided to adopt the fair value model for land; the fair value of land on 1 July 2017 was $3,500,000 and on 30 June 2018 was $3,250,000. 4. The research and development expenditure qualifies for the additional 25% taxation deduction. 5. The tax rate at 30 June 2017 was 30%. On 15 June 2018, legislation was enacted decreasing the tax rate to 25% effective 1 July 2018. Required: 1. Prepare a deferred tax worksheet to calculate the amounts for deferred tax assets and deferred tax liabilities for the reporting period 30 June 2018. Use an appropriately labelled table for this task. 2. Prepare journal entries for the income tax expense related items for the reporting period 30 June 2018.
Plant Accumulated depreciation-Plant Equipment Accumulated depreciation-equipment Wages and salaries payable Provision for long service leave Provision for warranty claims Interest payable 2,100,000 2,100,000 787,500 525,000 750,000 750,000 225,000 150,000 345,000 265,000 355,000 245,000 130,000 115,000 100,000 100,000 Additional Information 1. All depreciable assets were acquired on 1 July 2015. For financial reporting purposes, depreciation is recognised on a straight line basis, over 20 years for buildings (estimated residual value $250,000), eight years for plant and 10 years for equipment. For tax purposes, straight line depreciation is applied over 40, 10 and eight years respectively. 2. After reviewing all relevant information, the directors determined that, at 30 June 2018, the plant was impaired by $250,000 (this is not reflected in the amounts presented in the trial balance). 3. On 30 June 2018, after careful consideration, the directors of Bula Island Ltd decided to adopt the fair value model for land; the fair value of land on 1 July 2017 was $3,500,000 and on 30 June 2018 was $3,250,000. 4. The research and development expenditure qualifies for the additional 25% taxation deduction. 5. The tax rate at 30 June 2017 was 30%. On 15 June 2018, legislation was enacted decreasing the tax rate to 25% effective 1 July 2018. Required: 1. Prepare a deferred tax worksheet to calculate the amounts for deferred tax assets and deferred tax liabilities for the reporting period 30 June 2018. Use an appropriately labelled table for this task. 2. Prepare journal entries for the income tax expense related items for the reporting period 30 June 2018.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kindly help with the following question.
Transcribed Image Text:Plant
Accumulated depreciation-Plant
Equipment
Accumulated depreciation-equipment
Wages and salaries payable
Provision for long service leave
Provision for warranty claims
Interest payable
2,100,000 2,100,000
787,500
525,000
750,000
750,000
225,000
150,000
345,000
265,000
355,000
245,000
130,000
115,000
100,000
100,000
Additional Information
1. All depreciable assets were acquired on 1 July 2015. For financial reporting purposes,
depreciation is recognised on a straight line basis, over 20 years for buildings (estimated
residual value $250,000), eight years for plant and 10 years for equipment. For tax purposes,
straight line depreciation is applied over 40, 10 and eight years respectively.
2. After reviewing all relevant information, the directors determined that, at 30 June 2018, the
plant was impaired by $250,000 (this is not reflected in the amounts presented in the trial
balance).
3. On 30 June 2018, after careful consideration, the directors of Bula Island Ltd decided to adopt
the fair value model for land; the fair value of land on 1 July 2017 was $3,500,000 and on 30
June 2018 was $3,250,000.
4. The research and development expenditure qualifies for the additional 25% taxation
deduction.
5. The tax rate at 30 June 2017 was 30%. On 15 June 2018, legislation was enacted decreasing
the tax rate to 25% effective 1 July 2018.
Required:
1. Prepare a deferred tax worksheet to calculate the amounts for deferred tax assets and deferred
tax liabilities for the reporting period 30 June 2018. Use an appropriately labelled table for
this task.
2. Prepare journal entries for the income tax expense related items for the reporting period 30
June 2018.
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