Exam 18: Accounting for Income Taxes

As at 30 June 2012,net accounts receivables was $57 000,and the allowance for doubtful debts was $3000.On 30 June 2013,the respective balances were $64 000 and $4000.Assuming there were no other temporary differences,what is the journal entry to adjust for the changes in these balances as at 30 June 2013? The corporate tax rate is 30%.

The carrying amount of deferred tax assets and deferred tax liabilities can change:

Profit for taxation purposes is determined in accordance with AASB 112.

Temporary differences:

A deferred tax asset arises if:

Digitor Industries Ltd accrues long-service leave as employees work towards their entitlement.For tax purposes,long-service leave is not deductible until it is paid.During the current period Digitor has accrued $50 000 in long-service leave expense and paid none.The tax rate is 30%.What is the journal entry to record the deferral?

Which of the following statements is correct with respect to AASB 112 Income Taxes when a non-current asset is revalued?

Shopping Malls Ltd has some land it purchased several years ago for $300 000.It has revalued the land this period to $480 000 and management intends to sell it in the near future.When the land was acquired the index for capital gains tax was 110 and at reporting date it is 132.The tax rate is 30%.What is the entry to record the tax implications of the revaluation?

Under AASB 112,where the carrying amount of an asset is less than the amount that is economically recoverable,the deferred tax asset should be adjusted.

Explain,with examples,how changes in tax rates affect pre-existing deferred tax asset and deferred tax liability balances.

The tax base of a liability must be calculated as the liability's carrying amount as at the reporting date,less any future deductible amounts and plus any future assessable amounts that are expected to arise from settling the liability's carrying amount as at the reporting date.The exception to this rule is that:

A deductible temporary difference is one that will result in:

A change in tax rates does not require any change in the carrying amount of deferred tax assets and deferred tax liabilities.

Which of the following statements is correct with respect to AASB 112 Income Taxes when the government increase tax rates?

Deferred tax assets arise as a result of tax losses.In Australia losses incurred in previous years can always be carried forward to offset taxable income derived in future years.

When a non-current asset is revalued,the recognition of future tax associated with an asset that has a fair value in excess of cost,acts to reduce the amount of the revaluation reserve.

When the carrying amount of an asset exceeds its tax base,the amount that will be allowed as a deduction for tax purposes will exceed the amount of assessable economic benefits.

A company has received $40 000 for subscription revenue in advance and recorded a liability account 'revenue received in advance'.Revenue is taxed when it is received.The tax rate is 30%.What is the tax base for this item?

The generally accepted (a)accounting rule and (b)tax rule for development expenditure are:

Some items are typically not allowable tax deductions but are recognised as an expense for accounting purposes.Which of the following items are of that type?