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KureAll Pharmaceutical Industries, Inc., [KPI] manufactures a wide range of medical products which are distributed world wide. It reported an accounting income before income taxes
KureAll Pharmaceutical Industries, Inc., [KPI] manufactures a wide range of medical products which are distributed world wide. It reported an accounting income before income taxes of $1,875,000 for the year ended December 31, 2018. The following additional information is provided to you.
The carrying amount [net book value] of its capital assets as at January 1, 2018, was $3,768,000, and at January 1, 2019, was $3,828,000. Depreciation expense in 2018 on capital assets was $861,000. Similarly, the undepreciated capital cost balance (UCC tax basis) was $2,568,000 on January 1, 2018 and $2,304,000 on January 1, 2019. There were no asset disposals in 2018.
In 2017, a gel mixer was sold and a profit of $78,000 was recognized in accounting income. Because the sale was made with delayed payment terms, the profit is taxable only as KPI receives payments from the purchaser. A $6,000 profit on the down payment was received in 2017, with the balance expected to be received in equal amounts over the following three years.
Life insurance premiums on the life of the companys chief executive officer were paid by the company and amounted to $36,000. This expense is not deductible for tax purposes.
Dividends of $15,000 received during the year from a Canadian corporation were non-taxable.
KPI had a balance of $237,000 as warranty liability on January 1, 2018 and $168,000 on January 1, 2019. Warranty claims paid out during 2018 amounted to $135,000.
Golf club membership dues paid for company executives amounted to $60,000. This expense is not deductible for tax purposes.
In 2017, the government changed the income tax rate from 35% to 40%, effective January 1, 2018.
[43] If KPI operates under IFRS, how would the Deferred Tax Asset/Liability be reported?
Select one:
a.
$609,600 as a Long Term Liability; $94,800 as a Current Asset; and $19,200 as a Current Liability
b.
$609,600 as a Long Term Asset; $94,800 as a Current Asset; and $19,200 as a Current Liability
c.
$609,600 as a Long Term Liability; $75,600 as a Current Asset
d.
$685,200 as a Long Term Asset
e.
Cannot be determined from the given data
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