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Hi there! Thanks again for agreeing to help me out. I received a request from...

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Accounting

Hi there! Thanks again for agreeing to help me out.

I received a request from our client, Second Winter Ltd. Second Winter Ltd reported an Accounting Profit before tax of $3,000,000 for the year ended 30 June 2022.

They have provided the following additional information:

  • An item of plant is purchased at a cost of $2,000,000 on 1 July 2018, for accounting purposes, the plant is depreciated on a straight-line basis over 6 years, with residual value of $50,000. However, for taxation purposes, it can be depreciated over four years and have no residual value.
  • The income tax rate is 30%.

Can you please help me calculate the taxable profit; income tax expense and income tax payable for the year ended 30 June 2022? Can you also explain to them why the income tax expense usually differs from the income tax payable?

Q1A Calculate taxable profit for the year ended 30 June 2022. (4 marks)
Q1B Calculate income tax expense and income tax payable for the year ended 30 June 2022. (2 marks)

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