Marigold Services has provided the following information for use in determining its income tax obligations related to the year ended December 31.2020 Marigold Services Income Statement For the Year Ended December 31, 2020 Revenue Service Revenue $828,000 Dividend Revenue 45,000 Life Insurance Claim Received 101.500 Total Revenue $974,500 Operating Expenses Office Expenses 18,000 Depreciation Expense 102.000 Advertising Expense 21,900 Meals and Entertainment Expense 18,300 Rent Expense 36,100 Litigation Expense 23,000 Life Insurance Premiums Paid 8,000 Rent Expense 36,100 Litigation Expense 23,000 Life Insurance Premiums Paid 8,000 Salaries and Wages Expense 321,000 Warranty Expense 53,000 Total Operating Expense Income From Operations 601,300 $373,200 Additional Information: 1. Marigold is publicly owned and uses IFRS. It has an income tax rate of 25%. The dividend revenue represents dividends received from taxable Canadian corporations. 2. 3. 4. 5. During the year warranty expense of $53,000 was accrued. $10,600 of this amount was paid in cash during 2020. This is the first year Marigold offers warranties on services rendered. Property, plant, and equipment was purchased for $612,000 on January 1, 2019. These assets are being depreciated on a straight-line basis over six years with no residual value. For tax purposes the assets are classified as Class 8,20%. This PPE is considered "eligible equipment" for purposes of the Accelerated Investment Incentive (the "All") (under the All, instead of using the half-year rule, companies are allowed a first-year deduction using 1.5 times the standard CCA rate). This rate was used for 2019. Marigold pays for life insurance policies for its top executives. During 2020, one of the executives died, and the company received a payment of $101,500 from the life insurance company. On July 1, Marigold was sued by a competitor. Although the lawsuit has not been finalized, management believes that it is 4. 5. 6. 7. used for 2019. Marigold pays for life insurance policies for its top executives. During 2020, one of the executives died, and the company received a payment of $101.500 from the life insurance company. On July 1, Marigold was sued by a competitor. Although the lawsuit has not been finalized, management believes that it is probable that a settlement will eventually be reached for $23,000. On November 15, $30,000 was received from a customer for three months of service, beginning on November 15. One half of this amount was earned and included in revenue for 2020. Advance payments are included in taxable income when the cash is received. On December 1, one of the company executives received a speeding ticket for $150. The company paid the ticket for the executive and recorded the cost as an office expense. (a1) Calculate taxable income and taxes payable for 2020. Taxable Income $ Taxes Payable $