Murray Ltd purchased a machine on 1 July 2015 at a cost of $160,000. The machine is expected to have a useful life of 3 years (straight line basis)…

Murray Ltd purchased a machine on 1 July 2015 at a cost of $160,000. The machine is expected to have a useful life of 3 years (straight line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2016 is $450,000. The tax rate is 30%.

Required:

1. a) Calculate the company’s taxable profit and hence its tax payable for 2016.
2. b) Determine the deferred tax liability or deferred tax expense that will result.
3. c) Prepare the necessary journal entries.