Question
Charlie's Dinner Inc., a pet store, was incorporated on January 1, 2021. The following information about Charlie's accounting and taxable income for the year ended
Charlie's Dinner Inc., a pet store, was incorporated on January 1, 2021. The following information about Charlie's accounting and taxable income for the year ended December 31, 2021 follows:
| Accounting income before taxes | $250,000 |
| Items included in accounting income before taxes: |
|
| Dividends received from another Canadian company | 50,000 |
| Golf club membership dues | 5,000 |
| Meals and entertainment expenses | 12,000 |
| Depreciation expense | 90,000 |
| Warranty expense | 25,000 |
| Deductions available for taxes |
|
| CCA | 100,000 |
| Warranty costs incurred | 20,000 |
The company purchased $900,000 of depreciable assets at the beginning of 2021, and uses straight-line depreciation over 10 years useful life.
The company has a corporate tax rate of 18%.
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
15th edition
77861612, 1259194078, 978-0077861612, 978-1259194078
