Oranges Ltd’s profit before tax for the year ended 30

Oranges Ltd’s profit before tax for the year ended 30 June 2023 was $1,350,000. The assets and liabilities at 30 June 2022 and 30 June 2023 were:

 

2023

2022

Accounts receivable 235,000 200,000
Allowance for doubtful debts (13,000) (12,000)
Inventory 250,000 220,000
Land 100,000 110,000
Buildings 800,000 800,000
Accumulated depreciation – buildings (99,000) (70,000)
Equipment 600,000 600,000
Accumulated depreciation – equipment (190,000) (120,000)
Development expenditure – at cost 320,000 200,000
Accumulated amortisation – development expenditure (144,000) (80,000)
Deferred tax asset ? 29,600
Goodwill (net) 30,000
Accounts payable 170,000 150,000
Deferred tax liability ? 72,000
Provision for long service leave 36,000 28,000
Provision for warranty claims 32,000 34,000

Additional information:

  1. The tax rate is 30%.
     
  2. A tax deduction for development costs of 125% of the amount spent during the year is available for tax purposes. The profit reflects the amount of development costs amortized in the current period.
     
  3. Revenue for the year include’s Non-taxable income of $138,000.
     
  4. Expenses brought to account included: 
    1. Depreciation – buildings $29,000
    2. Depreciation – equipment $70,000
    3. Impairment – Goodwill (non-deductible) $30,000
    4. Amortisation – development expenditure $64,000
       
  5. Accumulated depreciation on equipment for tax purposes was $180,000 on 30 June 2022, and $285,000 on 30 June 2023.
     
  6. Bad debts of $14,000 were written off during the year, and warranty repairs to the value of $22,000 were carried out. There was no tax deduction for long service leave in the current year.
     
  7. Buildings are depreciated in the accounting records but no deduction is allowed for tax purposes.
     
  1. Prepare the current tax worksheet to calculate the current tax liability for the year ended 30 June 2023 (show all working).  
  2. Prepare the deferred tax worksheet to calculate the deferred tax asset and liability balances and adjustments for the year ended 30 June 2023.
    Include all accounts and net balances where appropriate. 
  3. Prepare the journal entries to recognize the current tax liability, deferred tax assets, and liabilities on 30 June 2023.

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