Sandhill Corp.'s operations in 2023 had mixed results. One division, Vincenti Group, again failed to earn income
Question:
Sandhill Corp.'s operations in 2023 had mixed results. One division, Vincenti Group, again failed to earn income at a rate that was high enough to justify its continued operation, and management therefore decided to close the division. Vincenti Group earned revenue of $128,000 during 2023 and recognized total expenses of $121,100. The remaining two divisions reported revenues of $282,000 and total expenses of $216,500 in 2023. In preparing the annual income tax return, Sandhill's controller took into account the following information:
1. | The CCA exceeded depreciation expense by $4,400. There were no depreciable assets in the Vincenti Group division. | |
2. | Included in the Vincenti Group's expenses is an accrued litigation loss of $5,700 that is not deductible for tax purposes until 2024. | |
3. | Included in the continuing divisions' expenses are the president's golf club dues of $5,600, and included in their revenues are $2,100 of dividends from taxable Canadian corporations. | |
4. | There were no deferred tax account balances for any of the divisions on January 1, 2023. | |
5. | The tax rate for 2023 and future years is 30%. | |
6. | Sandhill reports under IFRS. |
Calculate the taxable income and income tax payable by Sandhill in 2023 and the Deferred Tax Asset or Deferred Tax Liability balances at December 31, 2023.
Taxable income | $enter a dollar amount | |
---|---|---|
Income tax payable | $enter a dollar amount | |
Deferred tax select an option assetliability | $enter a dollar amount | |
Deferred tax select an option assetliability | $enter a dollar amount |
Prepare the journal entries to record income tax for 2023. (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 0 for the amounts.)
Year | Account Titles and Explanation | Debit | Credit |
2023 | |||
(To record current tax expense) | |||
2023 | |||
(To record deferred tax expense) | |||
2023 | |||
(To record deferred tax benefit on discontinued operations) |
Intermediate Accounting Volume 2
ISBN: 9781119740445
13th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy