Refer to the information in E18-15 for Zdon Inc. Assume that the company follows the taxes payable method of accounting for income taxes under ASPE. During the year, Zdon Inc. made tax instalment payments of $42,000.
In E18-15
Zdon Inc. reports accounting income of $105,000 for 2017, its first year of operations. The following items cause taxable income to be different than income reported on the financial statements.
1. Capital cost allowance (on the tax return) is greater than depreciation on the income statement by $16,000.
2. Rent revenue reported on the tax return is $24,000 higher than rent revenue reported on the income statement.
3. Non-deductible fines appear as an expense of $15,000 on the income statement.
4. Zdon's tax rate is 30% for all years and the company expects to report taxable income in all future years. Zdon reports under IFRS.
Instructions
(a) Calculate the taxable income and income tax expense for the year ended December 31, 2017.
(b) Prepare the journal entry(ies) to record income taxes at December 31, 2017.
(c) Prepare the income statement for 2017, beginning with the line "Income before income tax."
(d) Provide the balance sheet presentation for any resulting income tax accounts at December 31, 2017.