Question

Additional Information
1. All depreciable assets were acquired on 1 July 2015. For financial reporting purposes,
depreciation is recognised on a straight line basis, over 20 years for buildings (estimated
residual value $250,000), eight years for plant and 10 years for equipment. For tax purposes,
straight line depreciation is applied over 40, 10 and eight years respectively.
2. After reviewing all relevant information, the directors determined that, at 30 June 2018, the
plant was impaired by $250,000 (this is not reflected in the amounts presented in the trial
balance).
3. On 30 June 2018, after careful consideration, the directors of Bula Island Ltd decided to adopt
the fair value model for land; the fair value of land on 1 July 2017 was $3,500,000 and on 30
June 2018 was $3,250,000.
4. The research and development expenditure qualifies for the additional 25% taxation
deduction.
5. The tax rate at 30 June 2017 was 30%. On 15 June 2018, legislation was enacted decreasing
the tax rate to 25% effective 1 July 2018

2018 9,245,000 2017 Sales revenue Interest revenue Royalties revenue Dividend revenue Depreciation-building Depreciation-plant Depreciation-equipment Research and development expenditure Cost of goods sold Wananty expense Wages and salaries expense Long service leave expense 850,000 1,450,000 150,000 147,500 262,500 75,000 1,650,000 4,005,000 195,000 3.475.000 235,000 305.000 145,500 142,500 675,000 182,000 300,000 920,000 2,500,000 2,500,000 3.200,000 442,500 Interest expense Rates and taxes on property Doubtful debts expense Accounts receivable Estimated uncollectible debts Interest receivable Royalties receivable Land (at cost) Buildings Accumulated depreciation-buildings 375,000 95,000 275,000 745,000 3,200,000 295,000 Plant Accumulated depreciation-Plant Equipment Accumulated depreciation-equipment Wages and salaries payable Provision for long service leave Provision for waranty claims Interest payable 2,100,000 | 2,100,000 525,000 750,000 150,000 265,000 245,000 115,000 100,000 787,500 750,000 225,000 345,000 355,000 130,000 100,000

Required
Prepare a deferred tax worksheet to calculate the amounts for deferred tax assets and deferred
tax liabilities for the reporting period 30 June 2018. Use an appropriately labelled table for
this task.

Answer 1

Calculation of Deferred Tax for the period 30 June 2018

Particulars	Accounting	Taxation	Difference	Deferred Tax	Asset/ Liab
Depreciation on Building	147500	73750	73750	18438	Asset
Depreciation on Plant	262500	210000	52500	13125	Asset
Depreciation on Equipment	75000	93750	-18750	4688	Liability
Impairment of Plant	250000	0	250000	62500	Asset
Research & Development	1650000	2062500	-412500	103125	Liability
Net Deferred Tax				13750	Liability

Total Deferred Tax Asset - $ 94,063 Total Deferred Tax Liability - $ 107,813