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The profit before tax, reported in the statement of comprehensive income of Mexis Ltd for the year ended 30 June 2021

:

amounted to	4,050,000
Service revenue	126000
Prize money	227000
Doubtful debts expense	25000
Depreciation (Vehicle)	164500
Depreciation (Buildings)	40000
Maintenance expense	113000
Warranties expense	75000
Insurance expense	37000
Government issued fine	63200

The draft statements of financial position of the company at 30 June 2021 and 2020 showed the following assets and liabilities:

	2021 ($)	2020 ($)
Assets
Cash	265,000	291,000
Inventory	569,000	518,000
Accounts Receivable	1,645,000	1,569,000
Allowance for doubtful debts	-131,000	-121,000
Prepaid Insurance	70,000	65,000
Vehicle	1,645,000	1,645,000
Accumulated Depreciation - Vehicle	-658,000	-493,500
Buildings	1,012,000	1,012,000
Accumulated depreciation - Buildings	-405,000	-364,000
Land	632,000	632,000
Patents	253,000	253,000
Deferred tax asset	?	37,275
Liabilities
Accounts Payable	961,000	860,000
Provision for maintenance	202,000	151,000
Provision for warranties	139,000	101,000
Service revenue received in advance	88,000	63,000
Deffered tax liability	?	0

Additional Information:

Service revenue is tax assessable when it is received in cash

Prize money is not tax assessable

Doubtful debts are tax deductible when the company actually incurs bad debts/write off

For accounting purpose, the vehicle is depreciated using the annual straight line method at a rate of: 10%

For tax purpose, however, the vehicle is depreciated using the annual straight line method @ 15%

Depreciation on of buildings is not allowed as tax deductions and patents are not tax assesable

Warranties are tax deductible when they are paid in cash to affected customers

Insurance expense and maintenance expense are tax deductible when paid in cash

Government issued fine is not allowed as tax deduction

Assume a tax rate for the financial years ending 30 June 2020 and 2021 to be: 30%

Required:

Calculate the taxable income / tax loss and the current tax liability (if any) for the financial year ended 30 June 2021.

Prepare a journal entry to recognise the current tax liability / tax loss.

Calculate deferred tax asset and deferred tax liability balances as at 30 June 2021.

Prepare deferred tax journal entries for the year ended 30 June 2021.

Note: you are NOT required to prepare journals to offset the deferred tax asset and deferred tax liability balances.

Show your calculation using deferred tax worksheets by creating separate columns for:

Carrying amount, tax base, taxable temporary differences and deductible temporary differences.

Assume that by 1 December 2021 there was a change in tax rate to: 27.50%

With reference to AASB112 Income Taxes, discuss the accounting treatment of the deferred tax asset and deffered tax liability

Balances at 1 December 2021 following a lower tax threshold for the 2021-2022 financial year.

Prepare thejournal entries to record the effect of change in tax rate.

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