Question

A Ltd reported the following information for the year ended 30 June 2018:

Accounting profit before tax was 600 000.

A building was purchased on 1 July 2015 for $1 000 000. It is depreciated at 10% straight-line with zero residual value for accounting purpose and 20% straight-line with zero residual value for tax purposes.

Accounts receivable (gross): opening balance, 350 000; closing balance, 500 000. The allowance for doubtful debts: opening balance, 8 000; closing balance, 10 000. During the period, 4 000 bad debt were written-off.

Provision for long service leave: opening balance, 100 000; closing balance, 160 000; Long-service-leave expense: 80 000.

Company tax rate is 30%

What is the Taxable Income for the year ended 30 June 2018?

Answer 1

Particulars $ $ 600,000 $ (100,000) Accounting profit before tax Less Additional Depreciation on building as per tax Add Provision for doutful debts not allowed Provision for Long leave expense not allowed Taxable income for year ended 31 June 2018 $ 2,000 $ 60,000 $ 562,000

Depreciation as per books $ Depreciation as per tax $ Excess Depreciation required for tax $ 100,000 200,000 100,000 $ $ $ Provision closing Add Bad debts written off Less Opening Provision in books expensed As per tax Not allowed for tax 10,000 4,000 (8,000) 6,000 4,000 2,000 $ $ $ $ Provision for long service leave $ 160,000 Add long service leave expense $ 80,000 Less Opening Provision in books expensed $ $ (100,000) 140,000 80,000 60,000 As per tax Not allowed for tax $ $

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Answer 2

Particulars $ $ 600,000 $ (100,000) Accounting profit before tax Less Additional Depreciation on building as per tax Add Provision for doutful debts not allowed Provision for Long leave expense not allowed Taxable income for year ended 31 June 2018 $ 2,000 $ 60,000 $ 562,000

Depreciation as per books $ Depreciation as per tax $ Excess Depreciation required for tax $ 100,000 200,000 100,000 $ $ $ Provision closing Add Bad debts written off Less Opening Provision in books expensed As per tax Not allowed for tax 10,000 4,000 (8,000) 6,000 4,000 2,000 $ $ $ $ Provision for long service leave $ 160,000 Add long service leave expense $ 80,000 Less Opening Provision in books expensed $ $ (100,000) 140,000 80,000 60,000 As per tax Not allowed for tax $ $

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