Case Studv 1 Tax bases and deferred tax adiustments over time Aidan Ltd, a profitable company, purchased a machine on 1 July 2014 at a cost of $120 000. The machine had a useful life of 5 years and the company adopts the straight- line basis of depreciation. 0n 1 July 2015, the company reassessed the useful life of the machine down from the remaining 4 years to an expected 3 years. The accounting depreciation charge was adjusted accordingly. Because of a change in economic conditions, the machine was sold for $55 000 on 30 June 2017. The tax depreciation rate for this type of machine was 15% p.a. The company tax rate is 30%. Required For each of the 3 years ended 30 June 2015, 2016 and 2017, calculate the carrying amount and tax base of the asset, and determine the deferred tax entry in relation to the machine.
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