B is not correct because the calculation subtracted

B is not correct because the calculation subtracted the tax depreciation and added back fines to accounting
profit before tax to arrive at taxable profit. The calculation did not add back accounting depreciation.
C is not correct because this calculation took accounting profit before tax to equal taxable profit and multiplied
this by the tax rate. It did not add back fines and accounting depreciation and subtract tax depreciation.
Question 3 0 marks
Which of the following is the correct calculation of deferred tax?
A. Carrying amount - tax base
B. Temporary difference x tax rate
C. Taxable temporary difference x tax loss
D. Current tax + deductible temporary difference
No option was selected. This is incorrect.
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B is correct as to calculate the deferred tax, the temporary difference is multiplied by the tax rate. Temporary
differences arise when the carrying amount of the asset or liability differs from the tax base.

Question 4 0 marks
Entity A has an accounting profit of $300,000 and a taxable profit of $350,000.
During the year, a plant with a cost of $100,000 was depreciated at a rate of 20% for accounting purposes and at a
rate of 25% for tax purposes.
The entity also expensed a parking fine of $2,000.
The tax rate is 30%
What is the amount of tax expense that will be reflected in the Statement of Comprehensive income for the year?
A. $89,100
B. $104,100
C. $105,000
D. $106,500
No option was selected. This is incorrect.
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D is correct and the calculations to support this are as follows:
Tax expense = current tax + deferred tax expense - deferred tax income
Current tax = taxable profit x tax rate
350,000 x 30% = 105,000
Deferred tax
CA TB TD DT
(20,000) (25,000) 5,000 1,500
Tax expense = 105,000 + 1,500
= 106,500

Question 5 0 marks
Entity B purchased an asset for $200 000 three years ago and accounts for the asset in terms of the revaluation
model.
The asset is depreciated on a straight-line basis over 8 years for accounting purposes and over 10 years for tax
purposes.
The asset has a CGT cost base of $220 000 and CGT is applicable. At the end of year 3, the asset has a fair value
of $140,000.
If management intend to sell the asset, what would be the tax base at the end of year 3?
A. $125,000
B. $140,000
C. $154,000
D. $160,000
No option was selected. This is incorrect.
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D is correct as shown in the following calculations:
Carrying amount = new revalued amount = $140,000
Future deductible amounts = $220,000 - [($200,000/10 years useful tax life) x 3 years to accumulate dep] =
$160,000
Note: since the asset is going to be recovered through sale, the CGT base cost ($220,000) is used in the
calculation of future deductible amounts.
Tax base = Carrying amount + Future deductible amounts - Future taxable amounts
Tax base = $140,000 + $160,000 - $140,000
Tax base = $160,000

Question 6 0 marks
The balance sheet of Entity C included income received in advance with a balance of $30 000.
The amount comprised interest income of $20 000 and rentals from a tenant of $10 000.