Tutorial Week 5 Blackboard Questions and Solutions 3 Case 3 Determination of

Tutorial week 5 blackboard questions and solutions 3

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Tutorial Week 5 Blackboard Questions and Solutions 3 Case 3 Determination of Taxable Income $ $ Accounting profit before income tax 5 000 Add: Entertainment expense 7 000 Depreciation 10 000 Long service leave expense 600 17 600 22 600 Deduct: Long service leave for tax - Depreciation for tax 20 000 (20 000) Taxable income 2 600 Current tax liability @ 30% $ 780 The journal entry is: Income Tax Expense Dr 780 Current Tax Liability Cr 780 Case 4 Determination of Taxable Income $ $ Accounting loss before income tax (10 000) Add: Goodwill impairment 8 000 Depreciation 2 000 Long service leave expense 1 200 11 200 Deduct: 1 200 Long service leave for tax 2 400 Depreciation for tax 4 000 (6 400) Tax loss (5 200) Current tax liability @ 30% $0 Assuming that recognition criteria are satisfied, the journal entry is: Deferred Tax Asset (tax loss) Dr 1 560 Income Tax Income Cr 1 560
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