Ltd commences operations on 1 July 2016. One year after the commencement of its operations (30…

Ltd commences operations on 1 July 2016. One year after the commencement of its operations (30 June 2017) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2017. The statements are prepared before considering taxation. The following extracts are available.Happy LtdStatement of Comprehensive Incomefor the year ended 30 June 2017$$Gross Profit2,550,000Expenses:Miscellanous expenses3,000Rent165,000Wages and Salaries510,000Selling Expenses76,000Finance Expenses48,000Doubtful debts13,000Long service leave154,000Warranty expenses114,000Depreciation – Plant & Equipment400,000Insurance Expenses56,000Motor Vehicle Expenses37,000Accounting and Audit Fees17,0001,593,000Accounting profit for the year$ 957,000HappyAssets and Liabilities as disclosed in the Statement of Financial Positionfor the year ended 30 June 2017$$AssetsCash and cash equivalents176,000Inventory345,000Receivables (net)510,000Prepaid insurance23,000Plant and Equipment – cost2,000,000Less accumulated depreciation400,0001,600,000Land1,200,000Total assets3,854,000LiabilitiesPayables324,000Provision for warranty expenses86,000Loan payable830,000Mortgage450,000Provision for long service leave56,000Total liabilities1,746,000Net assets2,108,000Other information:? Amounts received from sales, including those on credit terms, are taxed at the time of the sale is made.? No bad debts have been written off during the financial year. Deductions for tax purposes are only available when the bad debts have been written.? The plant and equipment is depreciated over 5 years for accounting purposes, but over 4 years for taxation purposes.? Warranty expenses were accrued and, at the year-end, actual payments of $28,000 had been made (leaving of accrued balance of $86,000). Deductions for tax purposes are only available when the amounts are paid and not as they accrued.? The amount of $98,000 long service leave expense has been paid.? Insurance was initially prepaid to the amount of $79,000. At the year-end, the unused component of the prepaid insurance amounted to $23,000. Actual amounts paid are allowed as a tax deduction.? All other expenses incurred have been paid as at year-end.? Happy Ltd has some land which cost $800,000 and which has been revalued to its fair value of $1,200,000.? The tax rate is 30 per cent.Required:a) Compute the taxable income or loss (using excel spreadsheet). [5 marks]b) Complete the Taxation Worksheet on the next page in accordance with AASB 112 Income Taxes (using excel spreadsheet). [9 marks]c) Prepare the applicable journal entries at 30 June 2017 to account for tax using the balance sheet method. [6 marks]Part B [10 Marks]One year later (30 June 2018) an independent valuer assessed the fair value of the land to be $700 000 and the plant and equipment to be $1 644 000.Requireda) Prepare any necessary entries to revalue the land and the plant and equipment as at 30 June 2018. [7 marks]b) Assume that the plant has a remaining useful life of 4 years with zero residual value. Prepare entries to record the depreciation expense for the year ended 30 June 2019 using the straight-line method

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