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. On 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. Explain your answer.