ACC2CRE : Audited by Independent Auditors at the End of each Financial Year - Accounting Assignment Help

Assignment Task :

Question 1        

1. Why do you think that the reporting entities’ financial statements must be audited by independent auditors at the end of each financial year? Justify your answer in your own words.

2. Do you think it is appropriate to have a conceptual framework? Justify your answer in your own words.

Question 2 

Additional Information

1. The plant is depreciated over four (4) years for accounting purposes, but over three (3) years for taxation purposes.

2. All administration and salaries expenses incurred have been paid at year end. 

3. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.

4. Insurance was initially prepaid to the amount of $56,000. At year end, the unused component of the prepaid insurance amounted to $16,000. Actual amounts paid are allowed as a tax deduction.

5. Warranty expenses were accrued and at year end, actual payments of $20,000 were made (leaving an accrued balance of $60,000). Deductions for tax purposes are only available when the amounts are paid, and not as they are accrued.

6. None of the long service leave expense has actually been paid. It is not deductible until it is actually paid.

7. The tax rate is 30 per cent.

Required:

• Prepare a tax reconciliation (that is, determine Robinson Ltd’s taxable income). 

• Complete the Taxation Worksheet provided on page 5 in accordance with AASB 112: Income Taxes. [Copy the table provided in page 5 and paste it in your answer document to complete the Taxation Worksheet].  

• Prepare the applicable journal entries to record the tax adjustments as at 30 June 2020.

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