Case 2: Calculation of deferred tax, and adjustment entry (5%)The following information was extracted from the records of Jackson Ltd as at 30 June 2020.Carrying amountTax baseAsset (liability)Accounts receivable$175 000125 000$150 000Motor vehicles165 000Provision for warrantyDeposits received in advance(12 000)(15000)The depreciation rates for accounting and taxation are 15% p.a. and 25% p.a. respectively. Depositsare taxable when received, and warranty costs are deductible when paid. An allowance for doubtfuldebts of $25 000 has been raised against accounts receivable for accounting purposes, but such debtsare deductible only when written off as uncollectable.Required1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify yourclassification of each difference as either a deductible temporary difference or a taxabletemporary difference.2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for the yearended 30 June 2020 assuming no deferred items had been raised in prior years.

Deferred Tax Assets: It shows the amount of advance tax that a company has paid in excess of the…

1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify classification of each difference as either a deductible temporary difference or a ta temporary difference. 2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for th ended 30 June 2020 assuming no deferred items had been raised in prior years.

1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify classification of each difference as either a deductible temporary difference or a ta temporary difference. 2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for th ended 30 June 2020 assuming no deferred items had been raised in prior years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Recognition of tax benefits in the loss year due to a NOL carry back involves: O The establishment of an income tax refund receivable. Only a note to the financial statements. The establishment of a deferred tax liability. O The establishment of a deferred tax asset.
None
In 2021, a company accrued salaries expense. It will make the payment in 2022. At the end of 2021, as a result of this transaction, the company will __________. (Enter 1, 2, 3, or 4 that represents the correct answer). 1. record a deferred tax asset. 2. record a deferred tax liability. 3. have a permanent difference in pretax financial income and taxable income for 2021. 4. have no differences in pretax financial income and taxable income for 2021.
At December 31, 2018 PT ABC reported a deferred tax liability of Rp90.000 which was attributable to a taxable temporary difference of Rp300.000. The temporary difference is scheduled to reverse in 2022. During 2019, a new tax law increased the corporate tax rate from 30% to 40%. ABC should record this change by debiting: * Retained Earnings for Rp9.000. Income Tax Expense for Rp9.000. Retained Earnings for Rp30.000. Income Tax Expense for Rp30.000.
*see attached problem REQUIRED: What is the deferred tax balance by the end of 2020?
Eight Independent situations are described below. Each involves future deductible amounts and/or future taxable amounts: 1. 2. 3. 5. 6. 7. 2 The Income Statement Revenue 3 4 5 6 7 8 ($ in millions) Temporary Differences Reported First on: The Tax Return $24 19 19 19 Expense $24 Situations Taxable Income 1 24 24 24 24 Revenue $24 19 9 Expense Required: For each situation, determine taxable income, assuming pretax accounting income is $140 million. (Enter your answers in millions (I.e., 10,000,000 should be entered as 10).) $24 14 14
Novak Inc. reports the following pretax income (loss) for both book and tax purposes. Pretax Year Income (Loss) Tax Rate 2018 20 % 2019 20 % 2020 25 % 2021 25 % $123,000 98,000 (105,000) 110,000 The tax rates listed were all enacted by the beginning of 2018.
Subject: acounting
The following transactions were made by Company X during the current fiscal year. Explain whether or not each transaction is tax deductible under the ITAA for each transaction.
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Pine Ltd is reviewing its deferred tax for the year. In each of the following situations prepare the end-of-period adjustment journal entries to account for income tax on the initial appearance or reversal of any temporary differences. Explain in each case why particular accounts are affected. 1.The company purchased a depreciable asset at the beginning of the year for $200 000. For accounting purposes, an annual depreciation rate of 20% straight-line is used, whereas for taxation the rate is 30% straight-line. 2.The company’s provision for long-service leave at the beginning and end of the year are $80 000 and $77 500 respectively. In the current year, $10 000 in long-service leave was paid to a long-standing employee. 3. The company has interest receivable of $25 000 at the end of the year. No interest was receivable at the beginning of the year. Interest income is included in taxable profit only when received. 4.The company has revalued land at the end of the year. The…