Question 1 2 points ✓ Saved Western Sydney Ltd commenced operations on 1 July 2018. The following has been extracted from their internal reports for the second year of operations: (Note: data for the first year of operations is available from Week 4 Lecture Example) Income Statement (Extract) for the year ended 30 June 2020 Gross profit. Expenses Administration expenses Doubtful debts expense. Salaries expense... Interest..... Long-service leave Warranty expense Depreciation expense - plant Insurance expense $ 778 000 56 000 21 000 195 000 13 000 28 000 41 000 80 000 30 000 464 000 314 000 Accounting profit before income tax expense Assets and liabilities as disclosed in the balance sheet as at 30 June 2020 were: Assets Cash....... Inventory Accounts Receivable (net of $6,000 D. Debt Allowance) Prepaid insurance Plant cost Accum Depn - Plant Liabilities Accounts Payable....... Provision for warranty Provision for long-service leave Loan Payable...... 26 000 105 000 129 000 3 000 400 000 160 000 240 000 74 500 45 000 2 000 175 000 Additional information: ⚫ Plant is depreciated straight-line with no residual value over five years for accounting purposes and four years for taxation purposes. ⚫ The administration expense includes payment of $12,000 for goodwill impairment. ⚫ Bad debts written off during the year were $21,000. ⚫ Insurance, warranty and long-service leave are deductible for tax purposes when paid. . The tax rate is 30% Required: (a) Calculate taxable income and its current tax consequences.
Question 1 2 points ✓ Saved Western Sydney Ltd commenced operations on 1 July 2018. The following has been extracted from their internal reports for the second year of operations: (Note: data for the first year of operations is available from Week 4 Lecture Example) Income Statement (Extract) for the year ended 30 June 2020 Gross profit. Expenses Administration expenses Doubtful debts expense. Salaries expense... Interest..... Long-service leave Warranty expense Depreciation expense - plant Insurance expense $ 778 000 56 000 21 000 195 000 13 000 28 000 41 000 80 000 30 000 464 000 314 000 Accounting profit before income tax expense Assets and liabilities as disclosed in the balance sheet as at 30 June 2020 were: Assets Cash....... Inventory Accounts Receivable (net of $6,000 D. Debt Allowance) Prepaid insurance Plant cost Accum Depn - Plant Liabilities Accounts Payable....... Provision for warranty Provision for long-service leave Loan Payable...... 26 000 105 000 129 000 3 000 400 000 160 000 240 000 74 500 45 000 2 000 175 000 Additional information: ⚫ Plant is depreciated straight-line with no residual value over five years for accounting purposes and four years for taxation purposes. ⚫ The administration expense includes payment of $12,000 for goodwill impairment. ⚫ Bad debts written off during the year were $21,000. ⚫ Insurance, warranty and long-service leave are deductible for tax purposes when paid. . The tax rate is 30% Required: (a) Calculate taxable income and its current tax consequences.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2 points
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Western Sydney Ltd commenced operations on 1 July 2018. The following has been extracted from their internal reports for the second year of operations:
(Note: data for the first year of operations is available from Week 4 Lecture Example)
Income Statement (Extract) for the year ended 30 June 2020
Gross profit.
Expenses
Administration expenses
Doubtful debts expense.
Salaries expense...
Interest.....
Long-service leave
Warranty expense
Depreciation expense - plant
Insurance expense
$
778 000
56 000
21 000
195 000
13 000
28 000
41 000
80 000
30 000
464 000
314 000
Accounting profit before income tax expense
Assets and liabilities as disclosed in the balance sheet as at 30 June 2020 were:
Assets
Cash.......
Inventory
Accounts Receivable (net of $6,000 D. Debt Allowance)
Prepaid insurance
Plant cost
Accum Depn - Plant
Liabilities
Accounts Payable.......
Provision for warranty
Provision for long-service leave
Loan Payable......
26 000
105 000
129 000
3 000
400 000
160 000 240 000
74 500
45 000
2 000
175 000
Additional information:
⚫ Plant is depreciated straight-line with no residual value over five years for accounting purposes and four years for taxation purposes.
⚫ The administration expense includes payment of $12,000 for goodwill impairment.
⚫ Bad debts written off during the year were $21,000.
⚫ Insurance, warranty and long-service leave are deductible for tax purposes when paid.
. The tax rate is 30%
Required:
(a) Calculate taxable income and its current tax consequences.
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