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Question

The statements of financial position of DaJen Ltd at 30 June 2019 and 30 June 2018 include the

following

assets and liabilities:


DAJEN LTD


Statement of Financial Position (Extract)


as at 30 June


2019 2018


Assets

Cash

Accounts receivable

Allowance for doubtful debts

Prepaid insurance

Plant

Accumulated depreciation - plant

Goodwill

Accumulated impairment losses

Deferred tax asset

Liabilities

Accounts payable

Provision for long-service leave

Current tax liability

Deferred tax liability


$ 6 000

96 000

(6 800)

3 400

140 000

(32 000)

22 200

(11 100)

?

78 000

13 200

?

?

$ 18 000

85 000

(5 200)

5 600

170 000

(28 000)

22 200

9 540

76 000

9 700

3780


Additional information

(a) For tax purposes the carrying amount of plant sold was $15 000.

(b)The tax deduction for plant depreciation was $20 250. The accumulated depreciation on plant

for tax purposes at 30 June 2019 is $40 250 (2018: $35 000).

(c)In the year ended 30 June 2018, the company recorded a tax loss. At 1 July 2018 carry

forward tax losses amounted to $16 900. The company recognised a deferred tax asset in

respect of these tax losses at 30 June 2018.

(d)Tax losses carried forward must be offset against any exempt income before being used to

reduce taxable income.

(e)The company does not set off deferred tax liabilities and assets and the corporate tax rate is

30%.


Required


B. Prepare the deferred tax worksheet as at 30 June 2019 and the tax journal entries. 15 marks

C. Discuss the factors the company should have considered before recognising a deferred tax

asset with respect to the tax loss incurred in the year ended 30 June 2018? 4 marks

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