Question

		2018	2017
Sales revenue		9,245,000
Interest revenue		850,000
Royalties revenue		1,450,000
Dividend revenue		150,000
Depreciation-building		147,500
Depreciation-plant		262,500
Depreciation-equipment		75,000
Research and development expenditure		1,650,000
Cost of goods sold		4,005,000
Warranty expense		195,000
Wages and salaries expense		3,475,000
Long service leave expense		235,000
Interest expense		305,000
Rates and taxes on property		145,500
Doubtful debts expense		142,500
Accounts receivable		675,000	375,000
Estimated uncollectible debts		182,000	95,000
Interest receivable		300,000	275,000
Royalties receivable		920,000	745,000
Land (at cost)		2,500,000	2,500,000
Buildings		3,200,000	3,200,000
Accumulated depreciation-buildings		442,500	295,000
Plant	2,100,000			2,100,000
Accumulated depreciation-Plant	787,500			525,000
Equipment	750,000			750,000
Accumulated depreciation-equipment	225,000			150,000
Wages and salaries payable	345,000			265,000
Provision for long service leave	355,000			245,000
Provision for warranty claims	130,000			115,000
Interest payable	100,000			100,000	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. Required: 1. Calculate the amount of current tax expense. Use an appropriately labelled table for this task. 2. 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. 3. Prepare journal entries for the income tax expense related items for the reporting period 30 June 2018

Answer 1