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Question On 1 July 2017, Bright Star Ltd was incorporated. The...

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Question On 1 July 2017, Bright Star Ltd was incorporated. The...

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On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star for the three years to 2019 are as follows:

particulars. 2019 2018

    Profit before tax $4500 000 $3600 000

Warranty expense $0 $1500 000

Depreciation expense - machinery $60000 $60000

Gain on sale of machinery for accounting $o $0

Warranty paid $750 000

Tax depreciation - machinery $90000 $90000

Gain on sale of machinery for tax - -

Provision for warranty - carrying amount $750 000 $150 000

Provision for warranty - tax base - -

Machinery - carrying amount $180 000 $240 000

Machinery - tax base $120 000 $210 000

the company tax rate is 30%

Required

(a) Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019 (4 marks)

(b) Prepare the required tax journal entries for each year. (3 marks)

Answer & Explanation

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Answered by tutorkiplagat on coursehero.com

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