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 Doubtful debts expense Long-service leave expense $7,000 3,000 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 assuming recognition criteria are satisfied. d) What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020? Question 2 On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600. At this date the statement of financial position of Eldorado Ltd was as follows: MachineryFixtures & fittingsVehiclesCurrent assetsCurrent liabilitiesTotal net assetsShare capital (80,000 shares at $1.00 per share) General reserveRetained earningsTotal equity Carrying amount $40,00060,00035,000 10,000 (16,000) $129,000 $80,000 20,000 29,000 $129,000 Fair value $67,000 68,000 35,000 12,000 (18,000) Required:Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition. Question 3 a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying value in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent. Required:Prepare the necessary journal entries in 30 June 2017 to eliminate the intra-group transfer of equipment.
|
At 30 June 2019, Beta Ltd had the following Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items: |
|
$7,000 3,000 4,000 For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020: Tax depreciation – plant $8,000 Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies. Required:
|
Question 2
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.
At this date the
Machinery
Fixtures & fittings
Vehicles
Current assets
Current liabilities
Total net assets
Share capital (80,000 shares at $1.00 per share) General reserve
Total equity
Carrying amount $40,000
60,000
35,000
10,000 (16,000) $129,000 $80,000 20,000 29,000 $129,000
Fair value $67,000 68,000 35,000 12,000 (18,000)
Required:
Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.
Question 3
a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities:
-
On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.
-
During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%.
Required:
(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the
intragroup transfers of inventory.
(ii) Compute the amount of cost of goods sold to be reported in the consolidated income
statement for 2017 relating to the relevant intra-group sales.
b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying value in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent.
Required:
Prepare the necessary journal entries in 30 June 2017 to eliminate the intra-group transfer of equipment.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
