On the 30 June 2021 B Ltd had a balance of $198,000 in its deferred tax liability account and $76,000 in its deferred tax asset account. As of 30 June 2022, the taxable temporary totalled $720,000 and the deductible temporary differences totalled $330,000. Accounting profit before tax for the year ended 30 June 2022 was $900,000. This profit includes entertainment expense $200,000; government grants $30,000; accounting depreciation $7,500 (tax depreciation $5,500); warranty expense $2,000 (cash payment $1,000). Assume a current tax rate of 30%. differences Requirement: a) Calculate the current tax liability for the year ended 30 June 2022 and prepare the journal entry to record the current tax in the books. [Narrations are not required] b) Calculate the deferred tax liability and deferred tax asset on 30 June 2022 and prepare the journal entry to record the deferred tax amounts. [Narrations are not required]

On the 30 June 2021 B Ltd had a balance of $198,000 in its deferred tax liability account and $76,000 in its deferred tax asset account. As of 30 June 2022, the taxable temporary totalled $720,000 and the deductible temporary differences totalled $330,000. Accounting profit before tax for the year ended 30 June 2022 was $900,000. This profit includes entertainment expense $200,000; government grants $30,000; accounting depreciation $7,500 (tax depreciation $5,500); warranty expense $2,000 (cash payment $1,000). Assume a current tax rate of 30%. differences Requirement: a) Calculate the current tax liability for the year ended 30 June 2022 and prepare the journal entry to record the current tax in the books. [Narrations are not required] b) Calculate the deferred tax liability and deferred tax asset on 30 June 2022 and prepare the journal entry to record the deferred tax amounts. [Narrations are not required]

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...

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