Deferred Tax worksheet-Financial Accounting
You are required to submit your assignment as a word file using 1.5 line spacing, size 12, Times New Roman font.
You can use excel for tables/workings/statements however these then need to be inserted into your Word document as a picture:
- select the section of text cells you want to copy from excel, click Ctrl + C (to copy the section)
- go to your word document and right click your mouse button, under paste Options go to the 4th icon (Picture U) and click on it
- This will insert your excel section
Please find the instructions for Part 2 of the assignment over the page.
Simpson Ltd was established on 1 July 2019 with share capital totalling $132,000.
One year later at 30 June 2020 the trial balance of the company was as follows:
|Allowance for doubtful debts||200|
|Machinery (at cost)||79,000|
|Accumulated depreciation – Machinery||5,900|
|Accumulated depreciation – Vehicles||100|
|Accumulated impairment loss||300|
|Provision for annual leave||1,800|
|Provision for services warranties||600|
|Capital profit on sale of land||700|
|Cost of sales||175,000|
|Goodwill impairment loss||300|
|Salaries & wages||120,000|
|Fines and penalties||100|
|Fringe benefits tax||200|
- For tax purposes, depreciation on machinery is $14,000 and for vehicles $300, for the year ended 30 June 2020.
- Doubtful debts, annual leave and service warranties are expensed in the year ending 30 June 2020 but are not tax deductible for tax purposes until paid.
- Simpson Ltd has accrued annual leave entitlements of $1,800 in calculating net profit for the year ended 30 June 2020.
- Service warranty expense is only deductible as a tax deduction when claimed by customers.
- The company accrues doubtful debts expense as soon as it appears on a customer’s account as uncollectible. However, the bad debt is not allowable as a tax deduction until all avenues to collect the account have been exhausted.
- The tax rate is 30% and taxable income is $79,500.
- Complete a deferred tax worksheet.
- Complete the general journal entry to account for income tax.
- Complete a statement of comprehensive income for the year ended 30 June 2020 (follow format in textbook on page 650 – 9th edition, showing one year only).
- Prepare a balance sheet at 30 June 2020 (follow format in textbook on page 181 – 9th edition, showing one year only).
- Discuss whether you think the deferred tax assets and liabilities are assets and liabilities in relation to the definitions contained in the conceptual framework (reference your written work to support your arguments). Maximum 300 words.