Income Tax For 2020 Financial Statements of Totalconcept Pty Ltd - Accounting Assignment Help

Assignment Task -

Question 1 

You are currently preparing the income tax note for inclusion in the 2020 financial statements of Totalconcept Pty Ltd, a small proprietary company, which is considered to be a reporting entity.   

Note that the 2020 tax balances in the financial statements (particularly the DTA and DTL balances) have not been updated from the previous year.  

Question 1 (Cont.)

Question 1 (Cont.)

Additional Information: 

1. Unearned rental income of $15,000 shown as a current liability in the Balance Sheet relates to non?refundable rental income received in advance from tenants. 
2. The tax written down value of the plant and equipment at 30 June 2019 was $245,000. Tax depreciation for the year ended 30 June 2020 was $67,000. The tax written down value of the plant and equipment at 30 June 2020 was therefore $178,000. 
3. The tax written down value of the building at 30 June 2019 was $75,000. Tax depreciation of the building for the year ended 30 June 2020 was $10,000. The tax written down value of the building at 30 June 2020 was therefore $65,000. 
4. The prepayments shown in the Balance Sheet relates to the payment for business licences and registrations required by Government regulations. As such, they are fully deductible under Section 82KZM of the ITAA (1936) when initially paid. 
5. The company uses the “actual method” to value meal entertainment fringe benefits. The entertainment of $12,000 shown in the Income Statement relates exclusively to client lunches and dinners. No entertainment was provided to employees. 
6. Warranties are claimed as an allowable deduction under Section 8?1 of the ITAA (1997) when paid.
7.  Assume that the company has not paid any PAYG instalments to the Australian Taxation Office during the 2020 income year. 

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