A Company Commenced Business on 1 July 2022 The Deferred Tax Liability Is:
A) $2 400

question 9

Multiple Choice

A company commenced business on 1 July 2022. On 30 June 2023, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: Assets Liabilities
Cash $20 000 Accounts payable $50 000
Inventories 60 000 Provision for annual leave 8 000
Plant 200 000
Accumulated depreciation (20 000)
Additional information:
The plant was acquired on 1 July 2022. Depreciation for accounting purposes was 10% (straight-line method) , while 20% (straight-line) was used for tax purposes.
The tax rate is 30%.
Using the following worksheet, determine the deferred tax asset and deferred tax liability.
$\begin{array}{|l|c|c|c|c|c|c|}\hline& \begin{array}{c}\text { Carrying } \\\text { amount }\end{array} & \begin{array}{c}\text { Future } \\\text { taxable } \\\text { amount }\end{array} & \begin{array}{c}\text { Future } \\\text { deductible } \\\text { amount }\end{array} & \text { Tax base } & \begin{array}{c}\text { Taxable } \\\text { temporary } \\\text { differences }\end{array} & \begin{array}{c}\text { Deductible } \\\text { temporary } \\\text { differences }\end{array} \\\hline \text { Assets } & \\\hline \text { Cash } & \\\hline \text { Inventories } & \\\hline \text { Plant } & \\\hline\\\hline \text { Liabilities } & \\\hline \text { Accounts payable } & \\\hline \text { Prov'n annual leave } & \\\hline\\\hline\\\hline\text { Deferred tax liability }\\\hline\text { Deferred tax asset }\\\hline\end{array}$ The deferred tax liability is:

• A) $2 400.
• B) $6 000.
• C) $8 000.
• D) $20 000.

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