Required: a. Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019b. Prepare the required tax journal entries for each year. On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant informationof Bright Star for the three years to 2019 are as follows:20192018Profit before tax$4 500 000$3 600 000Warranty expense1500 000Depreciation expense - machinery60 00060 000Gain on sale of machinery for accountingWarranty paid750 000Tax depreciation - machinery90 00090 000Gain on sale of machinery for taxProvision for warranty - carrying amount1500 000750 000Provision for warranty - tax baseMachinery - carrying amount180 000240 000Machinery-tax base210 000120 000The company tax rate is 30%.

Step 1 Journal is the part of book keeping.

Answered: Calculate the current and deferred tax…

Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019 b. Prepare the required tax journal entries for each year.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 12P: Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax...

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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: 2019 2018 Profit before tax $4 500 000 $3 600 000 Warranty expense — 1500 000 Depreciation expense – machinery 60 000 60 000 Gain on sale of machinery for accounting — — Warranty paid 750 000 — Tax depreciation – machinery 90 000 90 000 Gain on sale of machinery for tax — — Provision for warranty – carrying amount 750 000 1500 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 (b) Prepare…
On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star for the two years to 2019 are as follows: 2019 2018 Profit before tax $4 500 000 $3 600 000 Warranty expense — 1500 000 Depreciation expense – machinery 60 000 60 000 Gain on sale of machinery for accounting — — Warranty paid 750 000 — Tax depreciation – machinery 90 000 90 000 Gain on sale of machinery for tax — — Provision for warranty – carrying amount 750 000 1500 000 Provision for warranty – tax base — — Machinery – carrying amount 180 000 240 000 Machinery – tax base 120 000 210 000 The company tax…
On 1 July 2017, Bright Star Ltd was incorporated. The accounting profit and other relevant information of Bright Star for the two years to 2019 are as follows: 2019 2018 Profit before tax $4 500 000 $3 600 000 Warranty expense 1500 000 Depreciation expense - machinery 60 000 60 000 Gain on sale of machinery for accounting Warranty paid 750 000 Tax depreciation - machinery 90 000 90 000 Gain on sale of machinery for tax 750 000 1500 000 Provision for warranty - carrying amount Provision for warranty-tax base Machinery - carrying amount 180 000 240 000 Machinery - tax base 210 000 120 000 The company tax rate is 30%. Required (a) Calculate the current and deferred tax of Bright Star Ltd for each year, 2018 and 2019 (b) Prepare the required tax journal entries for each year.
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