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Simpson Ltd was established on 1 July 2019 with share capital totalling $132,000.

One year later at 30 June 2020 the trial balance of the company was as follows:

Account	Debit	Credit
Cash	24,000
Accounts receivable	37,500
Allowance for doubtful debts		200
Interest receivable	100
Inventory	20,000
Prepaid insurance	300
Machinery (at cost)	79,000
Accumulated depreciation - Machinery		5,900
Vehicles	11,000
Accumulated depreciation - Vehicles		100
Goodwill	45,000
Accumulated impairment loss		300
Investments	25,000
Accounts payable		15,000
Rent payable		6,000
Provision for annual leave		1,800
Provision for services warranties		600
Share capital		132,000
Sales revenue		650,000
Interest revenue		500
Dividend revenue		300
Exempt income		400
Capital profit on sale of land		700
Cost of sales	175,000
Depreciation	6,000
Goodwill impairment loss	300
Salaries & wages	120,000
Annual leave	1,800
Rent	72,000
Insurance	1,200
Entertainment	400
Fines and penalties	100
Fringe benefits tax	200
Warranty expense	600
Doubtful debts Other expenses. 194,100 TOTAL. 813,800 813,800	200

Additional information

1. For tax purposes, depreciation on machinery is $14,000 and for vehicles $300, for the year ended 30 June 2020.

2. Doubtful debts, annual leave and service warranties are expensed in the year ending 30 June 2020 but are not tax deductible for tax purposes until paid.

3. Simpson Ltd has accrued annual leave entitlements of $1,800 in calculating net profit for the year ended 30 June 2020.

4. Service warranty expense is only deductible as a tax deduction when claimed by customers.

5. The company accrues doubtful debts expense as soon as it appears on a customers account as uncollectible. However, the bad debt is not allowable as a tax deduction until all avenues to collect the account have been exhausted.

6. The tax rate is 30% and taxable income is $79,500.

Required:

1. Prepare a balance sheet at 30 June 2020 (follow format in textbook on page 181 9thedition, showing one year only).

2. Discuss whether you think the deferred tax assets and liabilities are assets and liabilities in relation to the definitions contained in the conceptual framework (reference your written work to support your arguments). Maximum 300 words.

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