Crane Tar and Gravel Ltd. operates a road construction business. In its first year of operations,...

 

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Crane Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2023. Crane uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Crane uses the completed-contract method allowed by the CRA. For the second year of operations, Crane made progress on the construction of the road for the municipality. The account balances at December 31, 2024, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow. (The balances at December 31, 2023, are also listed.) 2024 2023 Accounts Receivable $106,800 $320,800 Asset/Liability (net of billings to date of $820,300 and $402,500) 125,200 100,600 Revenue from Long-Term Contracts 442,400 503,100 Construction Expenses 411,100 352,300 1,100,800 1,100.800 Equipment Accumulated Depreciation-Equipment Undepreciated Capital Cost 463,100 171,400 621,600 978,950 Crane's tax rate was 25% in 2023 and 2024. The enacted tax rate for 2025 and subsequent years was reduced to 20% on September form income tax for the year ended December 31, 2023, was $198.100 and for December 31, 2024, was Question 2 of 10 -/1 E: Crane's tax rate was 25% in 2023 and 2024. The enacted tax rate for 2025 and subsequent years was reduced to 20% on September 15, 2024. Income before income tax for the year ended December 31, 2023, was $198,100 and for December 31, 2024, was $125,200. Crane reports under IFRS. (a) Prepare the journal entry to record the effect of the change in the enacted tax rate. (List debit entry before credit entry. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.) 5°C Partly sunny Date Account Titles and Explanation September 15, 2024 eTextbook and Media List of Accounts Debit myhp O Search Credit View Policies Current Attempt in Progress Blossom Technologies Inc. held a portfolio of shares and bonds that it accounted for using the fair value through other comprehensive income model at December 31, 2023. This was the first year that Blossom had purchased investments. In part due to Blossom's inexperience, by December 31, 2023, the market value of the portfolio had dropped $28,900 below its original cost. Blossom recorded the necessary adjustments at December 31, 2023, and was determined to hold the securities until the unrealized loss from 2023 could be recovered. By December 31, 2024, Blossom's goal of recovery had been realized and the original portfolio of shares and bonds had a fair market value $6,400 higher than the original purchase costs. Blossom's income tax rate is 30% for all years. Assume that any gains that will ultimately be realized on the sale of the shares and bonds are taxable as ordinary income when they are realized. Blossom applies IFRS. (a) Prepare the journal entries at December 31, 2023, to accrue the unrealized loss on Blossom's securities and the related income tax. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) C artly sunny Date Account Titles and Explanation December 31, 2023 Debit Q Search O hp Credit myhp 49 Question 3 of 10 A -/1 E : Prepare the journal entries at December 31, 2023, to accrue the unrealized loss on Blossom's securities and the related income tax. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation December 31, 2023 December 31, 2023 (To record fair value adjustment) (To record deferred taxes on fair value adjustment) eTextbook and Media List of Accounts Q Search Debit Credit Crane Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2023. Crane uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Crane uses the completed-contract method allowed by the CRA. For the second year of operations, Crane made progress on the construction of the road for the municipality. The account balances at December 31, 2024, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow. (The balances at December 31, 2023, are also listed.) 2024 2023 Accounts Receivable $106,800 $320,800 Asset/Liability (net of billings to date of $820,300 and $402,500) 125,200 100,600 Revenue from Long-Term Contracts 442,400 503,100 Construction Expenses 411,100 352,300 1,100,800 1,100.800 Equipment Accumulated Depreciation-Equipment Undepreciated Capital Cost 463,100 171,400 621,600 978,950 Crane's tax rate was 25% in 2023 and 2024. The enacted tax rate for 2025 and subsequent years was reduced to 20% on September form income tax for the year ended December 31, 2023, was $198.100 and for December 31, 2024, was Question 2 of 10 -/1 E: Crane's tax rate was 25% in 2023 and 2024. The enacted tax rate for 2025 and subsequent years was reduced to 20% on September 15, 2024. Income before income tax for the year ended December 31, 2023, was $198,100 and for December 31, 2024, was $125,200. Crane reports under IFRS. (a) Prepare the journal entry to record the effect of the change in the enacted tax rate. (List debit entry before credit entry. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.) 5°C Partly sunny Date Account Titles and Explanation September 15, 2024 eTextbook and Media List of Accounts Debit myhp O Search Credit View Policies Current Attempt in Progress Blossom Technologies Inc. held a portfolio of shares and bonds that it accounted for using the fair value through other comprehensive income model at December 31, 2023. This was the first year that Blossom had purchased investments. In part due to Blossom's inexperience, by December 31, 2023, the market value of the portfolio had dropped $28,900 below its original cost. Blossom recorded the necessary adjustments at December 31, 2023, and was determined to hold the securities until the unrealized loss from 2023 could be recovered. By December 31, 2024, Blossom's goal of recovery had been realized and the original portfolio of shares and bonds had a fair market value $6,400 higher than the original purchase costs. Blossom's income tax rate is 30% for all years. Assume that any gains that will ultimately be realized on the sale of the shares and bonds are taxable as ordinary income when they are realized. Blossom applies IFRS. (a) Prepare the journal entries at December 31, 2023, to accrue the unrealized loss on Blossom's securities and the related income tax. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) C artly sunny Date Account Titles and Explanation December 31, 2023 Debit Q Search O hp Credit myhp 49 Question 3 of 10 A -/1 E : Prepare the journal entries at December 31, 2023, to accrue the unrealized loss on Blossom's securities and the related income tax. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation December 31, 2023 December 31, 2023 (To record fair value adjustment) (To record deferred taxes on fair value adjustment) eTextbook and Media List of Accounts Q Search Debit Credit

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