Exam 7: Income Taxes

Under AASB 112 Incomes Taxes, deferred tax assets and liabilities are measured at the tax rates that:

Generally, when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on:

Beta Limited has an accounting profit before tax of $200 000. All of the following items have been included in the accounting profit: depreciation of equipment $30 000 (tax deductible depreciation is $20 000); entertainment expenses $15 000 (non-deductible for tax purposes); Long service leave expense provided $6000 (no employee took long service leave during the year). The tax rate is 30%. The amount of current tax liability is:

Deferred tax accounting adjustments are recorded at what point in time?

On 1 April 2013, the company rate of income tax was changed from 35% to 30%. At the previous reporting date (30 June 2012) Montgomery Limited had the following tax balances: Deferred tax assets $26 250 Deferred tax liabilities $21 000 What is the impact of the tax rate change on income tax expense?

The following information was extracted from the financial records of Pamakari Limited: Equipment purchased on 1 July 2014 for $100 000 (accounting depreciation 10% straight line tax depreciation 20% straight line). If the company tax rate is 30%, the deferred tax item that will be recorded by Pamakari Limited at 30 June 2015 is:

Use the information below to answer questions A company commenced business on 1 July 2012. On 30 June 2013, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: Assets Liabilities Cash \ 40,000 Accounts payable \ 80,000 Inventory 100,000 Long service leave 5,000 Plant 300,000 Accumulated depreciation (30,000) Additional information: 1. The plant was acquired on 1 July 2012. Depreciation for accounting purposes was 10% (straight-line method), while 15% (straight-line) was used for tax purposes. 2. The tax rate is 30%. Using the following worksheet, determine the deferred tax asset and deferred tax liability. Carrying amount Future taxable amount Future deductible amount Tax base Taxable temporary differences Deductible temporary differences Assets Cash Inventory Plant Liabilities Accounts payable Long-service leave Deferred tax liability Deferred tax asset -The deferred tax liability is:

Which of the following disclosures are optional under AASB 112?

Malarky Limited accrued $30 000 for employees' long service leave in the year ended 30 June 2013. This item will not be tax deductible until it is paid in approximately 10 years' time. If the company tax rate is 30% Malarky Limited must record the following tax effect as a balance date adjustment:

A taxable temporary difference is expected to lead to the payment of:

Balchin Limited had the following deferred tax balances at reporting date: Deferred tax assets $12 000 Deferred tax liabilities $30 000 Effective from the first day of the next financial period, the company rate of income tax was reduced from 40% to 30%. The adjustment to income tax expense to recognise the impact of the tax rate change is:

Use the information below to answer questions A company commenced business on 1 July 2012. On 30 June 2013, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: Assets Liabilities Cash \ 40,000 Accounts payable \ 80,000 Inventory 100,000 Long service leave 5,000 Plant 300,000 Accumulated depreciation (30,000) Additional information: 1. The plant was acquired on 1 July 2012. Depreciation for accounting purposes was 10% (straight-line method), while 15% (straight-line) was used for tax purposes. 2. The tax rate is 30%. Using the following worksheet, determine the deferred tax asset and deferred tax liability. Carrying amount Future taxable amount Future deductible amount Tax base Taxable temporary differences Deductible temporary differences Assets Cash Inventory Plant Liabilities Accounts payable Long-service leave Deferred tax liability Deferred tax asset -The deferred tax asset is:

In jurisdictions where the impairment of goodwill is not tax deductible, AASB 112 Income Taxes:

D'Silva Limited has a product warranty liability amounting to $10 000. The product warranty costs are not tax deductible until paid out to customers. The company tax rate is 30%. The company has:

To the extent that tax payable exists and has NOT yet been paid a company will recognise:

A deductible temporary difference is expected to lead to the payment of:

Current tax consequences of business operations give rise to:

Differences between the carrying amounts of an entity's net assets determined under accounting standards and accrual accounting, and the tax bases of those net assets determined under the Income Tax Assessment Act, are described as:

CTT Limited has an asset which cost $300 and against which depreciation of $100 has accumulated. The accumulated depreciation for tax purposes is $180 and the company tax rate is 30%. The tax base of this asset is:

The following information relates to Godfrey Limited for the year ended 30 June 2014. Accounting profit before income tax (after all expenses have been included) \ 300000 Fines and penalties (not tax deductible) 20000 Depreciation of plant (accounting) 40000 Depreciation of plant (tax) 100000 Long-service leave expense (not a tax deduction until the leave is paid) 8000 Income tax rate 30\% On the basis of this information the current tax liability is: