Year 1 Year 2 Year 3 Accounting Income (loss) $150,000 $330,000 S(550,000) A Capital Asset was...

 

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Year 1 Year 2 Year 3 Accounting Income (loss) $150,000 $330,000 S(550,000) A Capital Asset was purchased on January 1 of year 1 at a cost of $90,000. Depreciation is $15,000 per year. CCA is $17,000 in year 1, $16,000 in year 2 and $10,000 in year 3. Warranty expense accrued on the financial statements is as follows: $8,000 in year 1. $10,500 in year 2 and $9,500 in year 3. Actual warranty claims paid is as follows: $5,000 in year 1, $11,000 in year 2 and $12,000 in year 3. Golf Dues equal to $10,000 was paid in year 2 and golf dues of 10,800 was paid in year 3. Tax rates are 35% in year 1, 37% in year 2 and 40% in year 3. Assume that it is probable that the loss carry forward will be used in the future years. Required: SHOW YOUR CALCULATIONS 1. Prepare the tax reconciliations for all three years. 2. Prepare the journal entries and the partial financial statements (both Income Statement and Balance Sheet) for all three years assuming IFRS. 3. Assume the company had Taxable Income equal to $21,500 in year 4 with no adjustment required for Temporary differences. What would be the Income Tax journal entries required in year 4? Assume year 4 had a tax rate of 25%. 4. Prepare the Loss Note disclosure required for Year 3 and Year 4. Year 1 Year 2 Year 3 Accounting Income (loss) $150,000 $330,000 S(550,000) A Capital Asset was purchased on January 1 of year 1 at a cost of $90,000. Depreciation is $15,000 per year. CCA is $17,000 in year 1, $16,000 in year 2 and $10,000 in year 3. Warranty expense accrued on the financial statements is as follows: $8,000 in year 1. $10,500 in year 2 and $9,500 in year 3. Actual warranty claims paid is as follows: $5,000 in year 1, $11,000 in year 2 and $12,000 in year 3. Golf Dues equal to $10,000 was paid in year 2 and golf dues of 10,800 was paid in year 3. Tax rates are 35% in year 1, 37% in year 2 and 40% in year 3. Assume that it is probable that the loss carry forward will be used in the future years. Required: SHOW YOUR CALCULATIONS 1. Prepare the tax reconciliations for all three years. 2. Prepare the journal entries and the partial financial statements (both Income Statement and Balance Sheet) for all three years assuming IFRS. 3. Assume the company had Taxable Income equal to $21,500 in year 4 with no adjustment required for Temporary differences. What would be the Income Tax journal entries required in year 4? Assume year 4 had a tax rate of 25%. 4. Prepare the Loss Note disclosure required for Year 3 and Year 4.