Exam 6: Income Taxes

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

The tax effect method of accounting for a company's income tax is based on an assumption that:

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:

Unless a company has a legal right of set-off, IAS 12 Income Taxes, requires disclosure of all of the following information for deferred tax statement of financial position items: I The amount of deferred tax assets recognised. II The amount of the deferred tax liabilities recognised. III The net amount of the deferred tax assets and liabilities recognised. IV The amount of the deferred tax asset relating to tax losses.

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) $300 000 Fines and penalties (not tax deductible) 20 000 Depreciation of plant (accounting) 40 000 Depreciation of plant (tax) 100 000 Long-service leave expense (not a tax deduction until the leave is paid) 8 000 Income tax rate 30% On the basis of this information the current tax liability is:

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:

ABC Limited has an asset with a carrying value of $50 000. The tax base of this asset is $40 000. The tax rate is 30%. As a result, which of the following deferred tax items does Roland Limited have?

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: