At 30 June 2017, before the inclusion of the current period's entries for taxation, Glasshouse Ltd recorded an accounting loss of $80 000, which included the following items:
Depreciation of equipment 50000
Doubtful debts expense Long-service 10000
leave expense 25000
Insurance expense 21000
Other information:
Equipment was purchased on 1 July 2011 for $300 000. It is depreciated for accounting purposes over 6 years but for taxation purposes over 5 years. The equipment has no expected residual value.
The yearly insurance premium of $36,000 was paid on 1 December 2016. At the end of the financial year the unused component of prepaid insurance amounted to $15 000.
No payments have been made in relation to long service leave, although a bad debt of $2,000 was written off during the year.
Deductions are available only when amounts are paid and not as they are accrued.
The tax rate is 27.5%
Required:
Calculate taxable income (loss) and the related current tax liability for the current year. You must show all workings and present your calculation in an appropriate format