At December 31, 2019, Kilroy Corp. (Kilroy) had the following components in its deferred income tax...
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At December 31, 2019, Kilroy Corp. (Kilroy) had the following components in its deferred income tax (DIT) account: DIT related to warranty liability DIT related to property, plant and equipment $ 19,600 debit 147,000 credit $127,400 credit Warranty expense to December 31, 2019, was $126,000, and claims paid were $70,000, leaving a $56,000 warranty liability balance in the statement of financial position at December 31, 2019. Also at December 31, 2019, the net book value of capital assets was $1,276,000, and undepreciated capital cost (tax basis) was $856,000. The following information relates to 2020: 1. Accounting income before income taxes was $625,000. 2. Included in revenues is $200,000 that will only be taxable in 2021. 3. Warranty claims paid out for 2020 were $45,000. The December 31, 2020, warranty liability balance was $33,000 after adjusting journal entries were recorded. 4. Depreciation of property, plant and equipment was $287,000. Capital cost allowance claimed was $395,000. 5. One asset was disposed of during 2020 for proceeds of $55,000. The asset's original cost was $100,000, and the net book value on the date of sale was $40,000. 6. There were NO additions to property, plant and equipment during 2020. 7. Dividends received from a taxable Canadian corporation were $5,000. 8. Golf club membership dues paid for Kilroy Corp.'s executives amounted to $20,000. 9. On June 1, 2020, the government unexpectedly changed the income tax rate to 40%, effective for the year ended December 31, 2020. Required: Calculate the current and deferred portion of income tax expense for the year ended December 31, 2020. (15 marks) At December 31, 2019, Kilroy Corp. (Kilroy) had the following components in its deferred income tax (DIT) account: DIT related to warranty liability DIT related to property, plant and equipment $ 19,600 debit 147,000 credit $127,400 credit Warranty expense to December 31, 2019, was $126,000, and claims paid were $70,000, leaving a $56,000 warranty liability balance in the statement of financial position at December 31, 2019. Also at December 31, 2019, the net book value of capital assets was $1,276,000, and undepreciated capital cost (tax basis) was $856,000. The following information relates to 2020: 1. Accounting income before income taxes was $625,000. 2. Included in revenues is $200,000 that will only be taxable in 2021. 3. Warranty claims paid out for 2020 were $45,000. The December 31, 2020, warranty liability balance was $33,000 after adjusting journal entries were recorded. 4. Depreciation of property, plant and equipment was $287,000. Capital cost allowance claimed was $395,000. 5. One asset was disposed of during 2020 for proceeds of $55,000. The asset's original cost was $100,000, and the net book value on the date of sale was $40,000. 6. There were NO additions to property, plant and equipment during 2020. 7. Dividends received from a taxable Canadian corporation were $5,000. 8. Golf club membership dues paid for Kilroy Corp.'s executives amounted to $20,000. 9. On June 1, 2020, the government unexpectedly changed the income tax rate to 40%, effective for the year ended December 31, 2020. Required: Calculate the current and deferred portion of income tax expense for the year ended December 31, 2020. (15 marks)
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