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A ustralian Company Accounting
Finance & Accounting
Pages 6 (1506 words)
Company Accounting Name Course Date of Submission Company Accounting Question: Requirement 1: For the calculation of income tax liability the accounting profit is to be adjusted for the carrying amount of the equipment and the tax exempted revenue. Thus the amount of accounting profit for the year 30 June 2011 becomes: Accounting Profit $ 18,500 Carrying amount of equipment sold $ 18,000 Royalty Revenue (exempt from tax) $ (5,000) Rent Revenue $ (16,000) ------------ Tax - Adjusted Accounting Profit $ 15,500 The tax rate is 30%.
Income tax Liability (Statement of Financial Position) $ 4,650 Requirement 3: Treatment: Doubtful Debts Expense: Doubtful debts represent that balance of amount which will not be recoverable out of the total trade receivables of the company. This is considered to be a trade expense thus is accounted for in the income statement of the company. Rent Revenue: Rent revenue is defined as an income generated by the company through renting out any of its assets. It can include machinery, equipment or property. All kinds of income generated by the company are included in the profit and loss account of the company. But for tax purposes it is taxable under savings income heading so it will be deducted from the profit of the company and taxable separately as the savings income has a different tax rate. Entertainment Expense: Entertainment expense comprises of the expense incurred during the process of entertaining the clientele of the company. ...
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