The Following Information Relates to Godfrey Limited for the Year

question 25

Multiple Choice

The following information relates to Godfrey Limited for the year ended 30 June 2014.
Accounting profit before income tax (after all expenses have been included) $300 000
Fines and penalties (not tax deductible) 20 000
Depreciation of plant (accounting) 40 000
Depreciation of plant (tax) 100 000
Long-service leave expense (not a tax deduction until the leave is paid) 8 000
Income tax rate 30%
On the basis of this information the current tax liability is:

• A) $74 400
• B) $78 000
• C) $80 400
• D) $99 600.

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Definitions:

Monopolies

Market structures characterized by a single seller controlling a large portion of the market and the lack of viable competition.

Long-run Equilibrium

A state in which all factors of production and market forces are in balance, with no external pressures prompting change.

P = MR

An equality indicating that a firm's price (P) is equal to its marginal revenue (MR), often associated with perfect competition and profit maximization strategies.

MC = ATC

A condition where the Marginal Cost of producing one more unit is exactly equal to the Average Total Cost, typically representing the point of productive efficiency.