Question

The following data applies to the two unrelated companies Aldi Ltd    Wooli Ltd:

Profit before tax for the year to 30 June 2020		$1,300,000		$136,000
Taxable income for the year to 30 June 2020		340,000		150,000
Deferred tax liability 1 July 2019		—		90,000
Deferred tax asset 1 July 2019		—		15,000
Taxable temporary differences at 30 June 2020		960,000		306,000
Deductible temporary differences at 30 June 2020		—		70,000

All taxable and deductible temporary differences relate to the profit or loss. Assume a corporate tax rate of 30%.

1. For each company, prepare the journal entries to record the current and deferred tax for 30 June 2020. Show all calculations

2. For each company, prepare the income tax section of the statement of profit or loss and other comprehensive income for the year ended 30 June 2020, and show the note disclosure for the current and deferred components of income tax expense.

Answer 1

a) Aldi Ltd	$
Taxable Income for the year to 30 June 2020	3,40,000
Current tax (340000 x 30%)	1,02,000
Deferred Tax for the year to 30 June 2020 :
Deferred Tax Liability (960000 x 30%)	2,88,000
Journal entry	$	$
Tax Expenses	1,02,000
Current Tax Payable		1,02,000
(Being tax payable for the year ended June 20)
Tax Expenses	2,88,000
Deferred Tax Liability		2,88,000
(Being DTL provided for the year ended June 20)
Wooli Ltd	$
Taxable Income for the year to 30 June 2020	1,50,000
Current tax (150000 x 30%)	45,000
Deferred Tax for the year to 30 June 2020 :	As at 30.06.20	Op. Bal.	July-June 20
Deferred Tax Liability (306000 x 30%)	91,800	90000	1,800
Deferred Tax Assets (70000 x 30%)	21,000	15000	6,000
Journal entry	$	$
Tax Expenses	45,000
Current Tax Payable		45,000
(Being tax payable for the year ended June 20)
Deferred Tax Assets	6,000
Deferred Tax Liability		1,800
Tax Expenses		4,200
(Being DTL/DTA provided for the year ended June 20)
a) Income Tax Section of Profit or loss and other comprehensive income for 30 June, 2020
	Aldi Ltd.	Wooli Ltd.
Tax Expenses
Current Tax	1,02,000	45,000
Deferred Tax	2,88,000	-4,200		1800-6000=-4200
Total Tax Expenses	3,90,000	40,800