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Hi Everyone,
I am hoping someone can please help me with the below accounting subject for my assignment?? It would be greatly appreciated to receive some help or at least a starting point.
Written exercise
The income statement extract for Abcee Pty Ltd in its first year of operation (before adjustment for deferred taxes) shows:
Abcee Pty Ltd Income Statement for year 1 (extract)
$
Net profit before depreciation and tax 40 000
Depreciation (2 000)
Net profit before tax 38 000
Note: The tax deduction for the non-current asset is $2 500.
The balance sheet of Abcee Pty Ltd after its first year of operations is as follows:
Abcee Pty Ltd Balance Sheet for year 1
$ $
Assets
Cash 52 000
Equipment 10 000
Less Accumulated depreciation (2 000)
Total assets 60 000
Net assets 60 000
Shareholders’ equity
Share capital 33 250
Retained profits 26 750
Total shareholders’ equity 60 000
Required:
A) Calculate the current tax expense and show the net profit transferred to the retained profits account.
B) Calculate the tax base of the asset.
C) Calculate the temporary difference and the deferred tax liability.
D) Show the journal entry to incorporate the deferred tax liability into the accounts.
E) Prepare a revised income statement and balance sheet after adjustments for deferred tax.
A) Current tax expense and net profit transferred to the retained profits account:
Abcee Pty Ltd Income Statement for year 1 (extract)
$
Calculation of current tax expense:
$
B) Tax base of the asset:
The tax deduction for depreciation expense is given in the income statement extract as $2 500. The tax base is:
$
C) Temporary difference and deferred tax liability:
$
D) General journal
Date Details Debit Credit
$ $
E) Adjusted income statement and balance sheet:
Abcee Pty Ltd Income Statement for year 1 (extract)
$
Abcee Pty Ltd Balance Sheet for year 1
$ $
I am hoping someone can please help me with the below accounting subject for my assignment?? It would be greatly appreciated to receive some help or at least a starting point.
Written exercise
The income statement extract for Abcee Pty Ltd in its first year of operation (before adjustment for deferred taxes) shows:
Abcee Pty Ltd Income Statement for year 1 (extract)
$
Net profit before depreciation and tax 40 000
Depreciation (2 000)
Net profit before tax 38 000
Note: The tax deduction for the non-current asset is $2 500.
The balance sheet of Abcee Pty Ltd after its first year of operations is as follows:
Abcee Pty Ltd Balance Sheet for year 1
$ $
Assets
Cash 52 000
Equipment 10 000
Less Accumulated depreciation (2 000)
Total assets 60 000
Net assets 60 000
Shareholders’ equity
Share capital 33 250
Retained profits 26 750
Total shareholders’ equity 60 000
Required:
A) Calculate the current tax expense and show the net profit transferred to the retained profits account.
B) Calculate the tax base of the asset.
C) Calculate the temporary difference and the deferred tax liability.
D) Show the journal entry to incorporate the deferred tax liability into the accounts.
E) Prepare a revised income statement and balance sheet after adjustments for deferred tax.
A) Current tax expense and net profit transferred to the retained profits account:
Abcee Pty Ltd Income Statement for year 1 (extract)
$
Calculation of current tax expense:
$
B) Tax base of the asset:
The tax deduction for depreciation expense is given in the income statement extract as $2 500. The tax base is:
$
C) Temporary difference and deferred tax liability:
$
D) General journal
Date Details Debit Credit
$ $
E) Adjusted income statement and balance sheet:
Abcee Pty Ltd Income Statement for year 1 (extract)
$
Abcee Pty Ltd Balance Sheet for year 1
$ $