Draft Income Statement As at December 31, 2020

REVENUE	$44,500,740
Cost of goods sold	23,540,891
Gross margin	20,959,849
EXPENSES
Accounting and consulting fees	$175,000
Advertising and promotion	1,575,000
Amortization	1,276,758
Bad debt	87,500
Insurance	85,000
Interest on convertible bonds	80,000
Legal fees	225,500
Office and general expenses	750,850
Rent	325,000
Repairs and maintenance	450,755
Research and development	11,345,000
Travel	133,750
Utilities	333,565
Wages and benefits	325,000
	$17,168,678
Earnings for the year before income taxes	$3,791,170
Income tax expense	1,137,351
Earnings for the year	$2,653,819
Earnings per sharebasic	$0.13
Earnings per sharediluted	$0.11
Weighted average shares outstandingbasic	20,550,750*
Weighted average shares outstandingdiluted	25,880,750*

^*Note that these values have been calculated and verified by the manager on the file and are deemed to be correct.

Exhibit III

Tax-Related Details

5. The companys tax rate is 30%. The income statement tax expense is calculated with the taxes payable method.
6. The office and general expense account contains $85,000 in meals and entertainment.
7. There are $175,000 in nondeductible expenses included in the accounting and consulting fees line item on the income statement.
8. The net book value (NBV) and undepreciated capital cost (UCC) for the capital assets are as follows:

   	NBV		UCC
   	2020	2019	2020	2019
   Land	$ 1,250,000	$ 1,250,000	n/a	n/a
   Buildings	4,500,750	4,650,775	$ 2,767,211	$ 3,255,543
   Furniture and fixtures	650,000	693,333	412,533	485,333
   Machinery and equipment	12,567,000	13,404,800	7,975,856	9,383,360
   Leasehold improvements	2,456,000	2,701,600	1,607,452	1,891,120
   	$21,423,750	$22,700,508	$12,763,052	$15,015,356

9. There were no capital asset additions or dispositions during the year.

Required: Calculate the current and future tax expenses.