Question

Caycuse Inc. (Caycuse) completed its first year of operations on December 31, 2017. The company owns a single asset that cost $200,000 and has no residual value. For tax purposes, Caycuse can deduct $30,000 in CCA in calculating its taxable income in 2017. Assume that Caycuse's tax rate is 16 percent.

Required:
a. Determine the future income tax asset or liability on December 31, 2017 if Caycuse depreciates its asset on a straight-line basis over 10 years.
b. Determine the future income tax asset or liability on December 31, 2017 if Caycuse depreciates its asset on a straight-line basis over five years.
c. Determine the future income tax asset or liability on December 31, 2017 if Caycuse depreciates its asset on a declining balance basis at 30 percent per year.
d. Determine the future income tax asset or liability on December 31, 2017 if Caycuse depreciates its asset on a declining balance basis at 15 percent per year..
e. According to the IFRS characteristics for determining whether a liability exists, is a future income tax liability really a liability? Should a future income tax asset be considered an asset? How would you interpret the future income tax assets or liabilities that you calculated in parts (a) through (d) above?



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  • CreatedFebruary 26, 2015
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