A ustralian Company Accounting Coursework Example | Topics and Well Written Essays - 1500 words

A ustralian Company Accounting - Coursework ExampleIncome revenue enhancement Liability (Statement of Financial Position) $ 4,650 Requirement 3 Treatment Doubtful Debts depreciate Doubtful debts array that balance of amount which will not be recoverable out of the total trade receivables of the social club. This is considered to be a trade set down 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 embroil 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 task 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 cli entele of the company. As the entertainment expenses incurred on the employees is not an allowable expense for tax purposes, it is assumed that this expense relates to the one incurred on the clientele unless otherwise stated. Thus it will also be included in the profit and loss account of the company for tax purposes as a deductible. Requirement 4 Calculation of Deferred tax income asset and Liability Calculation of tax base values of assets MOTOR VEHICLE obtain Value ($) Tax Base ($) Motor Vehicle (Cost) 18,000 18,000 Motor Vehicle (Acc. Depreciation) (15.750) (18,000) ------------------- ---------------- 2,250 Nil Thus Deferred Tax Liability = 2,250 * 30% = $675 EQUIPMENT Book Value ($) Tax Base ($) Equipment (Cost) 100,000 100,000 Equipment (Accumulated Depreciation) (60,000) (45,000) ------------------- ----------------- 40,000 55,000 Deferred Tax Asset = ($55,000-$40,000) * 30% = $ 4,500 RECEIVABLES Tax Base = $12,000 Thus deferred tax liability = 12,000 * 30%= $3,600 RENT R ECEIVBALE Tax Base = $2,800 Thus deferred tax liability = 2,800 * 30% = $840 Total Deferred Tax Liability = $675+$3,600+$840 = $ 5,115 Thus the new deferred tax asset and liability becomes $4,500 and $5,115 respectively. Requirement 4 Journal Entries Deferred Tax Asset Dr. Tax Expense (Statement of financial performance) $ 1,950 Cr. Deferred Tax Asset (Balance sheet) $ 1,950 Deferred Tax Liability Dr. Tax Expense (Statement of financial performance) $ 2,370 Cr. Deferred Tax Liability (Balance sheet) $ 2,370 Question 2 track Executive Summary This report is designed for the purpose of reflecting on the new accounting policy change that is being implemented by the company which requires the company to disclose its advertisement expense as an asset as opposed to be treated as an expense as it incurs. In this report it was notice and suggested that the criteria for the policy change implemented by the company met the recognition criteria of an asset as set by the AASB (Australian Acco unting Standard Board), and was of material balance to be disclosed in the financial statements of the company. Introduction The purpose of this report is to determine if the new policy of the company to record its advertisement expenses as an asset is avowedly and fair according to Australian