Bream Pty Ltd (Bream) Case Study - Accounting Assignment Help

Assignment Task

Task Overview:
• Your written response to this assignment must be presented in a business report format – (It must have an introduction/executive summary, a main body, and a conclusion). Bullet points are not acceptable.
• Responses to this assessment task must not exceed 2,000 words.
• You must cite relevant cases, ATO rulings, and legislative references to support your answers.
• Your response must also provide reasons that explain and support your answers.

Bream Pty Ltd (Bream) is a resident Australian private company based in Epping that manufactures electronic components. The company has one director and one shareholder, Mr Trevor Walsh who hold 50 shares in Bream. These shares were acquired for $4,000 per share on 15 December 1999 when Bream was incorporated.

Bream reported a net accounting profit of $884,000 for the year ended 30 June 2021. In preparing its income tax return for the year ended 30 June 2021, you have been asked to review the following notes:
- Trading stock to the value of $25,000 was purchased from US based supplier. However, as at 30 June 2021, the goods were still on board a ship at sea. Bream had the bill of lading, but this amount didn’t include in the Trading stock account as at 30 June 20212.
- Depreciation on plant and equipment for tax purposes amounted to $52,000. However, only $26,000 had been charged as an expense in arriving at the net accounting profit.
- On 1 July 2020, Bream purchased the machine at a cost of $50,000. Bream determined the machine to have an effective life of four years and claimed depreciation by using the prime cost method. Bream used the machine exclusively for business purposes. It sold the machine on 30 June 2021 for $30,000. The amount of $7,500 was included in the net profit from selling the machine. Depreciation on this machine for tax purpose amounted to $5,000.

REQUIRED:
1. Prepare a report for Bream’s Chief Financial Officer(CFO) that addresses the tax treatment of the items listed above (Assuming Bream is not small business entity). In your report, you are required to provide explanations for your answers AND refer to relevant statutory provisions, cases and /or rulings.
2. Calculate Bream’s taxable income and income tax payable for 30 June 2021. You are to use the attached table to complete your tax reconciliation/calculate tax payable. Bream paid company tax instalments (PAYG payments) for the year ended 30 June 2021 totalling $210,000.

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