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Question 1

Bax Ltds statement of profit or loss for the year ended 30 June 2017 and extracts from its statements of financial position as at 30 June 2017 and 30 June 2016 are shown below. The statements for the current year are yet to be finalised by accounting for income tax.

	Bax Ltd
	Statement of Profit or Loss
for the year ending 30 June 2017
Income
Service revenue	$ 900 000
Rent revenue	50 000
Insurance claim for loss of profits	41 200				991 200
Less: Expenses
Employee expenses	660 000
Insurance expense	50 000
Accounting fees	5 500
Bad and doubtful debts	19 500
Cleaning and maintenance	3 250
Depreciation of equipment	5 500
Entertainment expenses	4 000
Interest on borrowings	75 000
Legal fees	3 800
Motor vehicle expenses	6 000
Other	3 750
Restructuring costs		23 000			859 300
Profit before tax					$ 131 900

1

	Bax Ltd
Statement of Financial Position (Extract)
	as at 30 June
	2017	2016
Assets
Cash at bank	$ 900 100	$ 800 100
Trade debtors	240 550	200 000
Allowance for doubtful debts	(38 000)	(20 000)
Prepaid insurance	10 950	5 000
Land at fair value	450 000	300 000
Equipment at cost	58 000	58 000
Accumulated depreciation	(24 500)	(19 000)
Other debtors	142 400
Deferred tax asset	?	18 000
Liabilities
Trade creditors	239 000	245 000
Borrowings	543 800	438 500
Unearned rent revenue	50 000
Provision for employee benefits	49 500	40 000
Provision for restructuring	23 000
Other creditors	10 000
Current tax liability		13 300
Deferred tax liability	?	32 700

Additional information

The original cost of the land is $200 000.

The tax written down value of equipment at 30 June 2017 is $28 000 (2016: $35 000). During the 2017 year, there were no additions or disposals of equipment.

Legal fees of $3800 are capital in nature and non-deductible for tax purposes.

Other creditors at 30 June 2017 include an accrual for accounting fees of $4500 for work not yet performed (2016: $Nil). For tax purposes, the accounting fees are deductible only if work has been performed.

For tax purposes, restructuring costs are deductible only when paid.

Other debtors at 30 June 2017 include $41 200 relating to an insurance claim that is in-process. Insurance income is only assessable for tax purposes after the insurance proceeds have been received.

The corporate tax rate is 30%.

Required:

Prepare the deferred tax worksheet at 30 June 2017 and the deferred tax entries for the year.

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