Question 2A: 26 Marks (45 Minutes) Phoenix Inc. is a publicly traded company located in Vancouver,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 2A: 26 Marks (45 Minutes) Phoenix Inc. is a publicly traded company located in Vancouver, Canada. They are in the process of finalizing its financial statement for year ended December 31, 2021. Phoenix's accounting income for 2021 was $458,000. Selected extracts from Phoenix's accounting and tax records are as follows: Balances as at December 31, 2020: Loss carryforward Net book value of equipment Provision for warranty Undepreciated capital cost of the equipment Items included in determining 2021 accounting income: Cost of equipment sold Depreciation expense Dividend revenue from taxable Canadian corporations Interest on overdue accounts owing to the CRA Loss on sale of equipment Meals and entertainment expense Net book value of equipment sold Social club dues (not deductible for tax purposes) Warranty expense Activities during 2021: Payment of warranty expense Purchase of new equipment Remittance of tax installments to the CRA Other information: Capital cost allowance claimed in 2021 Development costs incurred $ 180,000 875,000 89,000 482,000 $ 160,000 98,000 7,000 1,000 17,000 6,000 89,000 4,000 26,000 $ 24,000 312,000 96,000 $ 69,000 10,000 On May 1, 2021, the government enacted income tax rate increase from 30% to 32%, retroactively effective on January 1, 2021. Management estimates that it is more likely than not that the loss carryforward would be used. Required: (a) Phoenix reported a net deferred tax liability of $ 37,200 on its Statement of Financial Position (SFP) as at December 31, 2020. Show how this amount was determined. (3 Marks) (b) Calculate the current and deferred income tax that will appear on the Statement of Comprehensive Income for the year ended December 31, 2021. (19 Marks) (c) Prepare the journal entries to record the current and deferred income tax expense for 2021. (3 Marks) (d) Calculate the amount for the SFP accounts. (1 Mark) Question 2A: 26 Marks (45 Minutes) Phoenix Inc. is a publicly traded company located in Vancouver, Canada. They are in the process of finalizing its financial statement for year ended December 31, 2021. Phoenix's accounting income for 2021 was $458,000. Selected extracts from Phoenix's accounting and tax records are as follows: Balances as at December 31, 2020: Loss carryforward Net book value of equipment Provision for warranty Undepreciated capital cost of the equipment Items included in determining 2021 accounting income: Cost of equipment sold Depreciation expense Dividend revenue from taxable Canadian corporations Interest on overdue accounts owing to the CRA Loss on sale of equipment Meals and entertainment expense Net book value of equipment sold Social club dues (not deductible for tax purposes) Warranty expense Activities during 2021: Payment of warranty expense Purchase of new equipment Remittance of tax installments to the CRA Other information: Capital cost allowance claimed in 2021 Development costs incurred $ 180,000 875,000 89,000 482,000 $ 160,000 98,000 7,000 1,000 17,000 6,000 89,000 4,000 26,000 $ 24,000 312,000 96,000 $ 69,000 10,000 On May 1, 2021, the government enacted income tax rate increase from 30% to 32%, retroactively effective on January 1, 2021. Management estimates that it is more likely than not that the loss carryforward would be used. Required: (a) Phoenix reported a net deferred tax liability of $ 37,200 on its Statement of Financial Position (SFP) as at December 31, 2020. Show how this amount was determined. (3 Marks) (b) Calculate the current and deferred income tax that will appear on the Statement of Comprehensive Income for the year ended December 31, 2021. (19 Marks) (c) Prepare the journal entries to record the current and deferred income tax expense for 2021. (3 Marks) (d) Calculate the amount for the SFP accounts. (1 Mark)
Expert Answer:
Answer rating: 100% (QA)
a 37200 180000 x 32 180000 x 30 37200 The net deferred tax liability as at December 31 2020 is 37200 ... View the full answer
Related Book For
College Accounting
ISBN: 978-1111528126
11th edition
Authors: Tracie Nobles, Cathy Scott, Douglas McQuaig, Patricia Bille
Posted Date:
Students also viewed these accounting questions
-
Emily Jackson (Social Security number 765-12-4326) and James Stewart (Social Security number 466-74-9932) are partners in a partnership that owns and operates a barber shop. The partnership's first...
-
Question 3 Egor's Electric Bike (EEB), a publicly traded company, reported net income before tax of $2,750,000 for the year ended December 31, 2021. The enacted tax rate for 2021 is 32%. Operating...
-
The founder, president, and major shareholder of Dewitt Corp. recently sold his controlling interest in the company to a national distributor in the same line of business. The change in ownership was...
-
You are an audit supervisor of PricewaterhouseCoopers (PwC) and are planning the audit of your client, Blister Pharmaceuticals co. which manufactures and imports sanitary and cleaning products...
-
Oakwood Hospital is considering using ABC analysis to classify laboratory SKUs into three categories: those that will be delivered daily from their supplier (Class A items), those that will be...
-
Find the canonical representative of the matrix equivalence class of each matrix. (a) (b) 0 2 2 (a 241 003
-
Ann Duxbury started her practice as a design consultant on March 1, 2010. During the first month of operations, the business completed the following transactions: Requirements 1. Open the following...
-
The following data pertain to Dakota Divisions most recent year of operations. Income ............. $ 4,000,000 Sates revenue ........... 50,000,000 Average invested capital ...... 20,000,000...
-
How might customer behavior change if customers interacted with chatbots versus with humans? How might this behavioral change affect the type of relationship formed with the company, the trajectory...
-
Table 1.0: List Price, Sale Price and Days to Sell ApartmentsBlue Apartments Red ApartmentsList Price Sale Price Days to Sell List Price Sale Price Days to Sell1 495.0 475.0 130 217.0 217.0 1822...
-
You will consider the time-period and daily share price of the company for the period 1st of February 2021 until 10th of August 2022. Provide a bar or candlestick chart (or multiple charts) of the...
-
Audit firms should train auditors to become IT experts in the auditing field, rather than expecting IT experts to become auditors. Discuss.
-
What is a transmittal letter?
-
An auditor anticipates assessing control risk at a low level in an IT envi- ronment. Under these circumstances, on which of the following controls would the auditor initially focus? a. Data capture...
-
To whom is the internal audit report distributed? How should it be distributed?
-
What were some of the reasons for the growth in demand for auditing in the 19th century?
-
Firms may organize their operations using the customer structure, especially if the customer groups they serve are dramatically different. True False
-
According to a New York Times columnist, The estate tax affects a surprisingly small number of people. In 2003, . . . just 1.25 percent of all deaths resulted in taxable estates, with most of them...
-
What is the difference between a periodic inventory system and a perpetual inventory system? Discuss.
-
Shirley, a friend of yours, is trying to understand the difference between common stock and preferred stock. Write a short memo to Shirley answering her questions. Make sure you review the privileges...
-
Leanders Landscaping Service maintains the following chart of accounts: Assets 111 Cash 113 Accounts Receivable 117 Prepaid Insurance 124 Equipment Liabilities 221 Accounts Payable Owners Equity 311...
-
Can we use the numerical integration methods discussed in this chapter to solve nonlinear vibration problems?
-
Houbolt method a. Assumes that acceleration varies linearly between \(t_{i}\) and \(t_{i}+\theta \Delta t ; \theta \geq 1\) b. Assumes that acceleration varies linearly between \(t_{i}\) and...
-
Express the following \(n\) th-order differential equation as a system of \(n\) first-order differential equations: \[a_{n} \frac{d^{n} x}{d t^{n}}+a_{n-1} \frac{d^{n-1} x}{d t^{n-1}}+\cdots+a_{1}...
Study smarter with the SolutionInn App