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1.4 Income tax accounting (25 marks) Included in the the accounting profit before tax for Reef Ltd for the period ended 30 June 2023 were the following accounting income and expense items: Advance supply revenue (900,000) Doubtful debt expenses 850,000 Accounting depreciation 2,300,000 Annual leave expenses 1,950,000 Land tax expenses 80,000 Fines and penalties 5,000 An extract of the current and prior period balance sheet accounts relevant for income tax accounting purposes are as follows: 30 June 2023 30 June 2022 Assets Accounts receivable 2,500,000 3,500,000 Allowance for doubtful debts (450,000) (280,000) Prepaid land tax 80,000 75,000 PPE 23,000,000 23,000,000 Accum depn - PPE (4,600,000) (2,300,000) Deferred tax asset ? 849,000 Liabilities Income tax payable ? 0 Unearned advanced supply revenue (590,000) (750,000) Provision for annual leave (2,000,000) (1,800,000) Deferred tax liability ? (712,500) Additional Information: Advanced supply revenue: Several customers pay Reef Ltd upfront for 6 months guaranteed supply of product. For accounting purposes, the revenue is brought to account as revenue over the length of the supply period. For tax purposes, the amount is assessable upfront when the cash is received. Cash received for the year was $740,000. Fines and penalties are not tax deductible. Doubtful debt expenses are accrued at year end for accounting. Tax deductions are only available when debts are written off. Debts

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