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The accounting profit before tax of an entity was $243,200 for the year ended 31 July 20X4.
The accounting profit included disallowable income from government grants of $48,000 and disallowable expenditure of $25,600 on entertaining expenses.
The entity also paid a $40,000 dividend to shareholders. The tax rates for the country were as follows:
Calculate the tax the entity is due to pay for the year ending 31 July 20X4.
Suggested Answer: B
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30 comments · newest first
GO
Goldie
11 months ago
Totally agree, option D seems right!
CH
Cherelle
11 months ago
Wait, how does the dividend affect the tax calculation?
LE
Leatha
11 months ago
I'm leaning towards option D, $44,160.
RO
Ronnie
12 months ago
Don't forget the disallowable income and expenses!
WI
Willie
12 months ago
The accounting profit was $243,200 before tax.
TH
Thaddeus
12 months ago
I’m pretty sure we just need to focus on the adjusted profit before tax to find the tax due, but I can’t recall the exact steps to take.
EL
Elvis
1 year ago
I feel like I’ve seen something similar in our revision notes, where we adjusted profits for tax purposes. I think we need to calculate the effective tax rate too.
GL
Glory
1 year ago
I think we need to subtract the disallowable expenses from the accounting profit, but I’m a bit confused about how the dividend plays into the tax calculation.
ST
Starr
1 year ago
I remember we had a practice question about adjusting profits for tax calculations, but I’m not sure how the disallowable income affects the taxable profit here.
EM
Emily
1 year ago
I'm a bit confused about how to handle the dividend payment. Does that affect the tax calculation in any way? I'll need to double-check the instructions to make sure I'm not missing anything important.
FE
Felix
1 year ago
This looks straightforward enough. I'll just need to be careful to apply the correct tax rates to the different components of the taxable profit. As long as I don't make any silly mistakes in the calculations, I should be able to get the right answer.
OS
Osvaldo
1 year ago
Okay, I think I've got this. First, I'll add the disallowable income of $48,000 and the disallowable expenditure of $25,600 to the accounting profit of $243,200 to get the taxable profit. Then I'll apply the tax rates to calculate the tax due.
MA
Marg
1 year ago
Hmm, I'm a bit unsure about how to handle the disallowable income and expenditure. Do I need to add them back to the accounting profit or subtract them? And what's the deal with the dividend payment?
ME
Melina
1 year ago
This looks like a straightforward tax calculation question. I'll need to adjust the accounting profit for the disallowable items and then apply the tax rates to calculate the tax due.
MA
Maryann
1 year ago
Alright, time to put on my accountant hat and get to work. This is going to be a piece of cake... or is it?
GE
German
1 year ago
I hope I don't end up like the government, trying to figure out how to tax the entertaining expenses. That must be a tough job!
DA
Danica
1 year ago
User 4: I agree with Danica, $44,160 sounds right.
ME
Merilyn
1 year ago
User 3: I'm going with $44,160.
TR
Tricia
1 year ago
User 2: No, I believe it is $39,174.
EV
Evangelina
1 year ago
User 1: I think the tax due to pay is $47,840.
TU
Tuyet
1 year ago
Okay, let's see. Disallowable income, disallowable expenses, and the tax rates - this is going to require some calculations.
EL
Elden
1 year ago
C) $57,546
RO
Rolland
1 year ago
B) $39,174
KI
Kindra
1 year ago
A) $47,840
CA
Caprice
2 years ago
I see your point, but I still believe it's $47,840 because of the disallowable income and expenditure.
LE
Levi
2 years ago
I disagree, I calculated it to be $39,174.
YE
Yesenia
2 years ago
Hmm, this looks tricky. I'll have to carefully go through the information provided to figure out the correct tax amount.
MA
Margot
1 year ago
User2: Yes, we have to consider the disallowable income and expenditure to get the correct tax amount.
DU
Dulce
1 year ago
User1: I think we need to calculate the tax based on the given information.
CA
Caprice
2 years ago
I think the tax due to pay is $47,840.