Question
In its first two years of operations, ending in 2020, Robert Inc paid taxes of $5,700 on taxable income of $30,000. The tax rate for
In its first two years of operations, ending in 2020, Robert Inc paid taxes of $5,700 on taxable income of $30,000. The tax rate for 2021 is 20%.
Robert Inc's loss before taxes for 2021 is $152,000. Robert Inc's expenses included $710,000 of depreciation expense, and meals and entertainment costs of $18,000 (they are one-half deductible for tax purposes).
At the beginning of the year, Robert Inc had a future tax liability of $24,700 based on $130,000 of temporary differences related to its fixed assets.
Robert Inc will claim $660,000 of CCA in 2021. Management anticipates using all of the loss carryforwards within the allowable carryforward period.
Robert Inc has a calendar year end.
Required:
a) Calculate Robert Inc's taxable income/loss for 2021.
b) Prepare the journal entries to record income taxes for 2021.
c) Calculate Robert Inc's 2021 total tax expense/recovery. What is their effective tax rate for 2021?
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Millon Cornett
9th edition
1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772
