Reference no: EM132469953

As reported in the statement of comprehensive income of Wonderland Ltd (a manufacture company) for the year ended 30 June 2019: The profit before tax amounted to: $20,830,000 and included the following revenue and expense items:

• Rent revenue $650,000
• Government grant received $1,171,000
• Doubtful debts expense $130,000
• Depreciation (Plant) $846,200
• Depreciation (Buildings) $208,000
• Warranty expense $585,000
• Annual leave expense $390,000
• Insurance expense $195,000
• Entertainment expense $325,400

The draft statements of financial position of the company at 30 June 2019 and 2018 showed the following assets and liabilities: 2019 ($) 2018 ($)

Assets                                                           2019                  2018

Cash                                                $1,366,000         $1,497,000

Inventory                                         $2,929,000         $2,668,000

Accounts receivable                           $8,462,000         $8,071,000

Allowance for doubtful debts                -$676,000          -$624,000

Prepaid insurance policy                       $364,000            $338,000

Plant                                                $8,462,000         $8,462,000

Accumulated depreciation - Plant           -$3,384,800       -$2,538,600

Buildings                                              $5,207,000        $5,207,000

Accumulated depreciation - Buildings        -$2,083,000      -$1,874,000

Land                                                      $3,254,000       $3,254,000

Goodwill (net)                                         $1,301,000         $1,301,000

Deferred Tax Asset                                         ?                 $192,810

Liabilities

Accounts payable                                        $4,947,000       $4,426,000

Provision for warranty                                   $1,041,000         $781,000

Annual leave payable                                     $716,000            $520,000

Rent received in advance                                $455,000             $325,000

Deferred Tax Liability                                            ?                      $0

Additional Information:

• Rent revenue is tax assessable when it is received in cash Government grant is not tax assessable Doubtful debts are tax deductible when the company actually incurs bad debts/write offs For accounting purposes, plant is depreciated using the straight line method at a rate of: 10% per annum For tax purposes, however, plant is depreciated at a rate of: 15% per annum Depreciation of buildings and entertainment expense are not allowed as tax deductions Employee entitlements including annual leave are tax deductible when they are paid in cash to the employees Insurance expense is tax deductible when it is paid in cash Warranty expense is tax deductible when it is paid in cash Aggregated turnover for the years ended 30 June 2018 and 2019 is in excess of $25 million and it is expected that turnover will exceed $50 million in the year ended 30 June 2020

Problem (1) Calculate the Deferred Tax Asset and Deferred Tax Liability balances as at 30th June 2019 ,deferred tax journal entry for the year ended 30th June 2019.