1: Accounting for Corporate Income Taxes (12 marks) The Ingenious Ventures Corporation reported the following accounting income for the past year of operations: Fiscal Year 2021 Accounting Income $ 311,053 The following list of items created differences between accounting and taxable income for the year ended December 31, 2021: (a) Ingenious Ventures sells its merchandise on an instalment contract basis. In 2021, the company elected, for tax purposes, to report the gross profit from these sales in the years the receivables are collected. However, for financial statement purposes, the company recognized all of the gross profit in 2021. Following is additional information pertaining to these instalment sales: Gross profit recognized in accounting income in 2021 Gross profit recognized in taxable income in 2021 Gross profit recognized in taxable income in 2022 Gross profit recognized in taxable income in 2023 $ 72,200 $ 36,100 $ 18,050 $ 18,050 (b) The company depreciates all of its property, plant and equipment on a straight-line basis for accounting purposes. In the calculation of taxable income, the company deducts capital cost allowance (CCA). This temporary difference will reverse equally over the 3-year period beginning in 2022. The company did not purchase nor dispose of any property, plant or equipment during the 2021 year. Other information pertaining to the company's depreciable assets follows: Undepreciated capital cost (UCC) at December 31, 2021 Net book value of property plant and equipment at December 31, 2021 Amount by which CCA exceeded depreciation expense for the 2021 year $ 282,000 $ 357,000 $ 21,586 (c) On September 1, 2021, Ingenious Ventures rented part of its building to Traditional Concepts Inc. (TCI) for a 2-year period. TCI paid the entire's first year's rent in advance on September 1, 2021. Ingenious included the entire amount received in its 2021 taxable income, but accounts for this income on an accrual basis for financial reporting purposes. Ingenious charges TCI the following amount for rent on an annual basis: Rent charged for the period of September 1, 2021 to August 31, 2022 $ 17,500 Question 1: Accounting for Corporate Income Taxes (Continued) (d) In 2021, Ingenious Ventures insured the lives of its chief executives. The premiums paid were recorded as an expense on the 2021 income statement. However, this amount is not deductible for income tax purposes. Ingenious paid the following amount for life insurance premiums during 2021: Life insurance premiums $ 8,416 Assume that for both financial reporting and income taxes, Ingenious has a year end of December 31, 2021. The company follows IFRS, and is subject to a corporate tax rate of 27%. Ingenious had the following balance in its deferred tax liability account on December 31, 2020: $ 14,422 Required: 1. Calculate taxable income and income tax payable for the 2021 year. (5 marks) 2. Determine the amount that will appear on the December 31, 2021 statement of financial position for deferred taxes. (4 marks) 3. Prepare the journal entries to record income taxes for 2021. (2 marks) 4. Prepare the income tax expense section of the income statement for 2021, beginning with the line "Income before income taxes". (1 mark)