Advanced Financial Accounting and Reporting 1

Semester 1/2024
Due date: 3 April 2024 Marks for final assessment 15%

 Complete this assignment and hand over to me during my class.

 Provide the following information on the cover page of your assignment.
 Answers should be typed on one side of the paper. No hand written answers will be
accepted.
 5% is deducted for late submissions.

Surname: JIK Given name: HENSLYN ID No: 202330528

_______________________________________________________________________________

Profit before tax, as reported in the statement of comprehensive income of Bartle Ltd for the
year ended 30 June 2023, amounted to $ 600 000, including the following revenue and
expense item.

$
Rent revenue 30 000
Government grant received (exempt from
tax) - free from tax. 10 000
Bad debts expense (allowable deduction) 60 000
Depreciation of plant 50 000
Long-service leave expense (deductible) 45 000
Annual leave expense (deductible) 30 000
Office supplies used (deductible) 15 000
Entertainment cost (non-deductible) 18 000
Depreciation of building (Non-deductible) 8 000

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The draft statements of financial position of the company at 30 June 2022 and 2023 showed
the following assets and liabilities.

2023 2022
Assets
Cash 80 000 85 000
Inventory 170 000 155 000
Receivables 500 000 480 000
Allowance for doubtful debts (55 000) (40 000)
Office supplies 25 000 22 000
Plant 500 000 500 000
Accumulated depreciation (260 000) (210 000)
Buildings 300 000 300 000
Accumulated depreciation (148 000) (140 000)
Goodwill net 70 000 70 000
Deferred tax asset ? 40 500
Liabilities
Trade payable 290 000 260 000
Long service leave payable 60 000 45 000
Annual leave payable 40 000 30 000
Rent received in advance 25 000 20 000
Deferred tax liability ? 38 100

Additional information

1. Depreciation of buildings and entertainment costs are not allowed as tax deductions.
The government grant revenue is not assessable for tax purpose.
2. Accumulated depreciation of plant for tax purpose was $ 315 000 at 30 June 2022
and depreciation for tax purpose for the year ended 30 June 2023 amounted to $ 75
000.
3. Office supplies are claimed as tax deduction when purchased.
4. Tax rate is 30%.

Required:

(a) Calculate the current tax for the year ended 30 June 2023.
(b) Prepare the deferred tax worksheet. Use the following format.
(c) Prepare the journal entries arising from the above

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 a).
Bartle Limited
Current Tax For The
Year Ended 30 June 2023
K K

Profit Before Tax 600 000

Add: Non-deductible items

Rent revenue 30 000

Depreciation of Plant 50 000

Entertainment cost 18 000

Depreciation of Building 8 000 106 000

706 000

Less: deductible items

Exempted income – Govt. Grant received 10 000

Bad Debts Expense 60 000

Long service leave expense 45 000

Annual Leave Expense 30 000

Office Supplies Used 15 000

Depreciation of plant 75 000 235 000

Taxable Income 471 000

Current tax payable: 471 000 x 30% = K141 300

Journal entries:

Dr Cr

Income tax Expense 141 300

Current Tax Liability 141 300

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 b).
Deferred Tax Worksheet as at 30 June 2023

Carrying Amount Taxable Deductible Tax TTD DTD

Amount Amount Base
(DTL) (DTA)

Assets:

Cash 80 000 0 0 80 000 0 0

Inventory 170 000 (170 000) 170 000 170 000 0 0

Receivables 445 000 0 55 000 500 000 55 000

(500 000 – 55 000)

Office 25 000 (25 000) 25 000 25 000

supplies

Plant 240 000 (240 000) 110 000 110 000 130 000
(500 000 – 260 (500 000 – 390
000) 000)

Buildings 152 000 152 000 0 0 152 000

(300 000 – 148
000)

Goodwill 70 000 70 000 0 0 70 000

net

Liabilities:

Trade 290 000 0 0 290 000

payable

Long 60 000 0 (60 000) 0 60 000

service
leave
payable

Annual 40 000 (40 000) 40 000

leave
payable

Rent 25 000 0 (25 000) 0 25 000

received in
advance

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Total 352 000 180 000
Temporary
Differences

Excluded building and 152 000 + 222 000 (222

Items: goodwill 000)
70 000

Net 130 000 180 000

Temporary
difference

Deferred tax Liability: 130 000 x 30% = K39 000

Less: Beginning Balance: (38 100)

Current Year adjustment: K900

Deferred Tax Asset: 180 000 x 30% = K54 000

Less: Beginning balance: (40 500)

Current Year adjustment: K13 500

Journal Entries
Dr Cr

Income tax expense 900

Deferred tax Liability 900

Deferred tax Asset 13 500

Income tax expense 13 500