Deferred tax assets and liabilities

Assignment Help Managerial Accounting

Reference no: EM133018103

Assignment Details

Wentworth Ltd had the following revenue and expense items were included for the period ended 30 June 2021.

Sales

Cost of sales

Interest revenue

381,550

125,000

16 000

Doubtful debts expense

Depreciation expense - plant (15% straight-line)

Rent expense

Entertainment expense

Long service leave expense

9 200

33 750

27 800

8 900

12 000

The statement of financial position at 30 June 2021 included the following:

	2021	2020
Cash	$ 14 000	$ 12 500
Accounts receivable	88 000	81 800
Allowance for doubtful debts	(10 000)	(8 200)
Inventories	72 100	63 300
Interest receivable	6 000	_
Prepaid rent	7 800	7 400
Plant	225 000	225 000
Accumulated depreciation - plant	(101 250)	(67 500)
Deferred tax asset	?	30 860
Accounts payable	76 200	78 600
Provision for long service leave	69 000	66 000
Deferred tax liability	?	3 720

Additional information
• The tax depreciation rate for plant is 10% straight-line.
• The tax rate is 30%.

Required

1. Prepare the worksheets and journal entries to calculate and record the current tax liability and the movements in deferred tax accounts for the year ended 30 June 2021. In your answer include the following general ledger accounts: Interest receivable; Provision or long service leave; Allowance for doubtful debts; Prepaid rent; Deferred tax liability and Deferred tax asset.

2. Assume the company has $20 000 in tax losses carried forward from the previous year. Explain how the company would treat this tax loss assuming that taxation legislation allows such losses to be offset against future taxable profit (reference your written work to support your answer). Maximum 200 words.

3. Discuss whether you think the deferred tax assets and liabilities are assets and liabilities in relation to the definitions contained in the conceptual framework (reference your written work to support your arguments). Maximum 300 words.

Attachment:- Corporate Accounting.rar

Reference no: EM133018103

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