David Ltd commences operations on 1 July 2018 On the same date, it purchases a machine at a cost of $1000 000 The machin
Posted: Sat May 07, 2022 7:46 pm
David Ltd commences operations on 1 July 2018
On the same date, it purchases a machine at a cost of $1000
000
The machine is expected to have a useful life of five years,
with benefits being uniform throughout its life. It will have no
residual value at the end of five years
Hence, for accounting purposes the depreciation expense would be
$200 000 per year
For taxation purposes, the ATO allows the company to depreciate
the asset over four years—that is, $250 000 per year
The profit before tax of the company for each of the next five
years (years ending 30 June) is $600 000, $700 000, $800 000, 900
000 and $10 00 000 respectively
The tax rate is 30 per cent
Required:
a) Calculate taxable profit on 30 June 2020.
b) Record the necessary journal entries on 30 June 2020.
On the same date, it purchases a machine at a cost of $1000
000
The machine is expected to have a useful life of five years,
with benefits being uniform throughout its life. It will have no
residual value at the end of five years
Hence, for accounting purposes the depreciation expense would be
$200 000 per year
For taxation purposes, the ATO allows the company to depreciate
the asset over four years—that is, $250 000 per year
The profit before tax of the company for each of the next five
years (years ending 30 June) is $600 000, $700 000, $800 000, 900
000 and $10 00 000 respectively
The tax rate is 30 per cent
Required:
a) Calculate taxable profit on 30 June 2020.
b) Record the necessary journal entries on 30 June 2020.