Select Page
  

At 30 June 2019, Beta Ltd had the following deferred tax balances:Deferred tax liability$18,000Deferred tax asset15,000Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included thefollowing items:Depreciation expense – plant$7,000Doubtful debts expense3,000Long-service leave expense4,000For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:Tax depreciation – plant$8,000Bad debts written off2,000Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rateof 30% applies.Required:a) Determine the taxable income and income tax payable for the year to 30 June 2020. (2.5 Marks)b) Determine by what amount the balances of the deferred liability and deferred tax asset willincrease or decrease for the year to 30 June 2020 because of depreciation, doubtful debts andlong-service leave. (3 marks)c) Prepare the necessary journal entries to account for income tax assuming recognition criteria aresatisfied. (2.5 marks)d) What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020? (2marks)