04-29-2010, 04:15 PM
Opening provision for warranty is $ 130,000 where as closing provision is $ 160,000
You need to calculate deferred tax on amounts reflected in balance sheet, you simply compare their carrying amounts with their respective tax base. In this case tax base for provision for warranty is zero. So As at June 30, 2009 your deferred tax asset would be 39,000. Entry would be
Deferred tax asset Dr. 39,000 (B/S)
Deferred tax Cr. 39,000 (P%L)
On June 30, 2010 your carrying amount is 160,000 so calculating deferred tax @ 30% (rate given in your question). Your deferred tax asset would be $ 48,000. Entry would be
Deferred tax asset Dr. 9,000 (B/S)
Deferred tax Cr. 9,000 (P&L)
As for second question its a question of inadmissible expense, there really is no journal entry. It is just for tax calculation, if anything inadmissible expenses are reflected in your tax charge reconciliation only.
Your second question though is not clear to me, so maybe the answer I gave is not what you were looking for.
Regards
You need to calculate deferred tax on amounts reflected in balance sheet, you simply compare their carrying amounts with their respective tax base. In this case tax base for provision for warranty is zero. So As at June 30, 2009 your deferred tax asset would be 39,000. Entry would be
Deferred tax asset Dr. 39,000 (B/S)
Deferred tax Cr. 39,000 (P%L)
On June 30, 2010 your carrying amount is 160,000 so calculating deferred tax @ 30% (rate given in your question). Your deferred tax asset would be $ 48,000. Entry would be
Deferred tax asset Dr. 9,000 (B/S)
Deferred tax Cr. 9,000 (P&L)
As for second question its a question of inadmissible expense, there really is no journal entry. It is just for tax calculation, if anything inadmissible expenses are reflected in your tax charge reconciliation only.
Your second question though is not clear to me, so maybe the answer I gave is not what you were looking for.
Regards
