Deferred tax liability $18,000Deferred tax asset 15,000Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items:Depreciation expense – plant $7,000Doubtful debts expense 3,000Long-service leave expense 4,000For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:Tax depreciation – plant $8,000Bad debts written off 2,000Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies. What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020?

SWFT Corp Partner Estates Trusts
42nd Edition
ISBN:9780357161548
Author:Raabe
Publisher:Raabe
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 4BCRQ
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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 $7,000
Doubtful debts expense 3,000
Long-service leave expense 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.

What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020?

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