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Burns Ltd commenced business on 1 July 20X1. On 30 June 20X2, an extract of the...

Burns Ltd commenced business on 1 July 20X1. On 30 June 20X2, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information:

Assets Liabilities
Cash $40 000 Accounts payable      $80 000   
Inventory 100 000 Long service leave      5 000   
Plant 300 000
Accumulated depreciation      (30 000)

Additional information:

  1. The plant was acquired on 1 July 20X1. Depreciation for accounting purposes was 10% (straight-line method), while 15% (straight-line) was used for tax purposes.
  2. The tax rate is 30%.

The deferred tax asset is:

Select one:

a. $5 000

b. $4 500

c. $1 500

d. $25 500

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Expert Solution

ekkarill92 answered 2 years ago
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