Behadrut Corporation uses IFRS for financial reporting. Information for 20X5 and 20X6 is provided below. Information relating
Question:
Behadrut Corporation uses IFRS for financial reporting. Information for 20X5 and 20X6 is provided below.
Information relating to 20X5 is as follows:
• The tax rate enacted in the year was 30%.
• Machinery was purchased 1 January 20X5 for $2,000,000.
• At the end of the year, the net book value of machinery was $1,800,000.
• At the end of the year, the UCC of machinery was $1,400,000.
• At the end of the year, the adjusted warranty liability was $85,000.
Information relating to 20X6 is as follows:
• Behadrut Corporation reported earnings before income tax of $455,000.
• The rate enacted in the year was 32%.
• Tax-free dividends were received from Canadian corporations totalling $24,000.
• Political contributions made totalled $10,000.
• Nondeductible fines and penalties paid totalled $3,000.
• Depreciation expense recorded was $200,000 and CCA was $420,000.
• Warranty expense was $55,000 and warranty claims paid totalled $35,000.
Required:
1. Calculate taxable income and taxes payable for 20X6.
2. Calculate the deferred income tax that should be reported on the SFP at the end of 20X6.
3. Provide the journal entry to record income tax expense in 20X6.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel