The 21st century offers many challenges to every one of us. As more firms go global, as more economies interconnect, and as the Web blasts away boundaries to communication, we….
Calculate the company’s taxable profit and hence its tax payable for 2017.
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years.
The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%.
- Calculate the company’s taxable profit and hence its tax payable for 2017. (2 marks)
- Determine the deferred tax liability and/or deferred tax asset that will result. (2 marks)
- Prepare the necessary journal entries on 30 June 2017. (3 marks)