MAA363 Corporate Accounting Project - Taxable Profit & Tax Liability

This project addresses corporate accounting principles related to taxable profit, current tax liability, and deferred tax assets and liabilities. Part A involves calculating the taxable profit and current tax liability for the financial year ending June 30, 2017, including relevant journal entries. It also calculates deferred tax asset and liability balances. Part B discusses the accounting treatment for tax losses under AASB112 Income Taxes, analyzing tax losses and gains from 2010 to 2017 and calculating the total tax payable. The solution includes detailed workings to support the calculations and analysis. This assignment showcases the application of accounting standards in a practical context, providing a comprehensive understanding of tax-related accounting procedures.

Department of Accounting
MAA363 CORPORATE ACCOUNTING
PROJECT
Question THREE Proforma
SPECIAL INSTRUCTIONS:
 Question 3 must be completed and submitted on this proforma.
 Please ensure that you understand the University rules on plagiarism – it must be
your own work.
 Include your answer in sections provided but include WORKINGS on the LAST
PAGE of the answers to each question.
 You can create more lines on the journal entry tables etc. by placing the cursor at the
end of a row and pressing return.

QUESTION 3 (PART A)
1. Calculate the taxable profit and the current tax liability for financial year ended 30
June 2017.
Particulars Debit Credit
DR Income tax Expenses 1017100
1017100
CR Current liabilities
DR Cash account 122000
CR rent recieved 122000
DR Sales account 390000
CR Machinery account 390000
Journal entries to recognise current tax liability/ tax loss.
Date Particulars Dr Cr
30/06/16 To balance b/d liabilities 13800
To balance b/d assets 266400
Income tax expenses 1017100
2. Calculate deferred tax asset and deferred tax liability balances as at 30
June 2017.
Accounts Carrying Tax Base Taxable Deductible

Amount Temporary
Difference
Temporary
Difference
$ $ $ $
Machinery 500000 390000 335000 110000
Total Temporary Differences
Adjustment:
Tax effect journal entries at 30 June 2017
Date Particulars Dr Cr
Balance b/d 103800
30/06/17 Current tax liabilities 1017100
Balance c/d 913300 913300

3. Tax effect journal entries to account for changes in tax rate
Date Particulars Dr Cr
PART B
Discuss the accounting treatment for tax losses for XYZ Ltd for the year ended 30th June 2017 as per
AASB112 Income Taxes (400 words).
In accordance with the taxable income and taxable losses incurred by the
organisation which are to be measured over the each year taxation on such amount.
Therefore, in accordance with the year 2010 the firm has loss of 300000 which is to
be changed as per the corporate tax rate of 30% amounted to -210000. Therefore, it
can be said that the business has deductible tax for 2010. In the year 2011 it again had
loss of 150000 which is to be deducted as per 30% of the tax levied over the loss
amounted to -105000. In accordance with the year 2012 here also the firm has
incurred loss of -20500 which will has the taxable amount of -14350. In the year 2013
the business as obtained gains of 77020 which has the taxable amount of 53914.
In accordance with the year 2014 the business has fruitful gains for 189100
which is the assessable income in accordance with the AASB112 so it will be taxable
at 30% of the corporate tax rate and is amounted to 132370. In the year 2015 the
profitable gains of organisation is 350000 which has incurred the taxable amount of
245000, same as in the year 2016 the taxable amount over income of 560000 is
392000. In the year 2017 the firm as incurred loss for 50000 which has the taxable
amount of 35000. Therefore, in accordance with the legislations it can be said that, in
the years where the firm has incurred losses are fully exempted from taxation but the
gains are to be taxed and the business has to make the payments for taxes. Therefore,
while aggregating the amount of all the year's tax that total amount of tax which has
to be payable by the firm is amounted to 458934. This is the taxable payment which
has to be paid by the firm in context with 30% of the corporate tax rate.

WORKINGS FOR QUESTION 3
Workings for the questions should be included here.
Financial Year Taxable Income/(Tax Loss) $ tax rate 30%
2010 -300000 -210000
2011 -150000 -105000
2012 -20500 -14350
2013 77020 53914
2014 189100 132370
2015 350000 245000
2016 560000 392000
2017 -50000 -35000
655620
tax rate 30% 196686
Taxable amount 458934 458934