FNSACC504A – Question 4

[Lara]

Hello, I have a quick query in realtion to the Final Assessment for unit FNSACC504A, Question 4.
The confusion has arisen from two points:
1. Provision for Annual Leave 2,500 (carrying amount)
Transfer to provision for Annual leave 10,500 (accounting records)
Does this indicate an increase and therefore I should include 13,000 (2,500+10,500) in my provision for annual leave on the taxable income statement?
2. “Additional information (iv) Machinery was acquired… for 250,000. For accounting purposes machinery is being depreciated at 30% per year”. Simple, 250,000 x 30% = 75,000.
However, it would appear that under “Assets: Accumulated depreciation – machinery” it is equal to 37,500 and then again “Depreciation of machinery: Accounting records” it is equal to 37,500.
37,500 represents 15%pa of the cost price of 250,000.
This does not make sense to me and further clarification would be greatly appreciated.
Thank you in advance.

[Suzanne]

Hi Lara

Annual Leave – when completing yours statement of taxable income the difference in annual leave comes about by looking at what has been provided during the year (accounting treatment) versus what annual leave has been paid for the year (taxable deduction only). The opening provision is not taken into account.

Machinery depreciation – you are on the right track, however you need to look at the acquisition date of the machinery. Depreciation isn’t for a full year. The rates are 30% for accounting and 20% for tax.

Hope this helps.

Suzanne

[Anoma]

Question 6 (Final Assessment)

In this question, I end up with a much higher amount of equity than the Net Assets calculated. Given that the total revenue is $1035000 (sales+commission+interest+gain on sale) before any deductions, and significant balances of Retained Earnings and Shares, I don’t think I can balance this Statement. Looks like I have missed something very important, Please help me.

Do the dividends paid as fully franked credits imply that the company would pay tax on the dividends declared on 1500000 ordinary shares?  Does this extra tax amount (1500000*.03*.3?) treat as Deferred tax liability?

Thanks

Anoma