Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jaunty Ltd. began operations on January 1, 2020. Jaunty purchased equipment on January 1, valued at $430,000. On December 31, 2020, Jaunty reported income before

Jaunty Ltd. began operations on January 1, 2020. Jaunty purchased equipment on January 1, valued at $430,000. On December 31, 2020, Jaunty reported income before taxes of $60,000. Included in income before taxes are the following items:

  • Meals of $7,000
  • Dividend income of $1,800 from another Canadian corporation
  • Warranty expenses of $8,000
  • Penalties on late payment of taxes of $750
  • Depreciation of $23,000

For tax purposes, Jaunty is able to claim $38,000 of CCA on its equipment for the year. After reviewing its accounts, Jaunty determined that it paid $3,000 in warranty costs for the year.

Jauntys tax rate for 2020 is 28%.

Required:

  1. Calculate Jauntys taxable income for 2020.
  2. Prepare the journal entry to recognize the current taxes for 2020.
  3. Assuming that Jaunty follows IFRS, determine the amount of deferred taxes for 2020 and prepare the necessary adjusting journal entry.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Eugene F Brigham, Phillip R Daves

9th Edition

032431986X, 9780324319866

More Books

Students also viewed these Finance questions

Question

What courses does he/she teach?

Answered: 1 week ago

Question

What are the APPROACHES TO HRM?

Answered: 1 week ago

Question

What are the potential limitations of group discussion?

Answered: 1 week ago