Question 1: Submit to Assignment Box Question [3% of your Final Assessment]
Kali Ltd reported a Profit before Income Tax Expense of $1,700,000 for the year ended
30 June 2020.
Additional Information
1) On
1 July
2016, Kali Ltd purchased a building at a cost of $3,000,000. For accounting purposes, the building is depreciated on a straight-line basis over 30 years, with zero residual value. For income tax purposes the building is depreciated 5% on cost per annum.
2) On
30 June 2019, the balance of the provision for warranty expenditure in Kali Ltd’s accounts was $450,000. During the year ending
30 June 2020, Kali Ltd provided an additional $250,000 for warranty expenditure, and paid warranty expenditure of $290,000. For income tax purposes, warranty expenditure is deductible when it is paid.
3) On
9 September 2015, Kali Ltd purchased Land at a cost of $950,000. On
30 June 2020, the land was revalued to $1,300,000.
4) On
30 June 2020, Kali Ltd recognised a goodwill impairment loss expense of $320,000. For income tax purposes, goodwill impairment loss is not tax deductible.
5) The company income tax rate is
30%.
Required:
a) Calculate the balance of the deferred tax assets and deferred tax liabilities at
30 June
2019
and
30 June
2020
for Kali Ltd, in accordance with AASB112:
Income Taxes. Show all workings necessary to derive your answer.
b) Calculate taxable income and income tax payable for Kali Ltd for the financial year ending
30 June 2020. Show all workings necessary to derive your answer.
c) Prepare the journal entry for Kali Ltd, to record income tax for the financial year ending
30 June 2020, in accordance with AASB112:
Income Taxes. Show all workings necessary to derive your answer.
Advice:
For examples of solutions to income tax questions, see Question 3, ACCT 2178 Session 3, 2018 Exam and Exam Solution; Question 3, ACCT 2178 Session 2, 2018 Exam and Exam Solution; and Question 3, ACCT 2178 Session 3, 2017 Exam and Exam Solution.
Past Exams and Exam Solutions are located on the ACCT 2178 Canvas site in “Modules”, scroll to the bottom to “Extra Resources”, where you will find “Past Exams and Solutions – ACCT 2178”.
Question 2: Submit to Assignment Box Question [1% of your Final Assessment]
Refer to Cochlear Ltd’s Annual Report 2020:
https://www.cochlear.com/au/en/corporate/investors/annual-reports
What are the amounts of Deferred Tax Assets and Deferred Tax Liabilities disclosed by Cochlear Ltd at 30 June 2020? Explain the
rationale
for the amounts of Deferred Tax Assets and Deferred Tax Liabilities recognised by Cochlear Ltd, using the information provided by Cochlear Ltd, in its notes to financial statements.