Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Martin Ltd., in the first year of its operations, reported the following information regarding its operations: a) Earnings before tax for the year was $2,500,000
Martin Ltd., in the first year of its operations, reported the following information regarding its operations: a) Earnings before tax for the year was $2,500,000 and the tax rate was 38%. b) Depreciation was $240,000, and CCA was $134,000. Net book value at year-end was $1,680,000, while UCC was $1,786,000. c) The warranty program generated an estimated cost (expense) on the statement of profit and loss of $514,000 but the cash paid out was $348,000. The $166,000 liability resulting from this was shown as a current liability. On the income tax return, the cash paid out for warranty repairs is the amount deductible. d) Golf club dues of $30,000 were included in the statement of profit and loss but were not allowed to be deducted for tax purposes. In the second year of its operations, Martin Ltd. reported the following information: a) Earnings before income tax for the year was $2,750,000, and the tax rate was 40%. b) Depreciation was $240,000, and the CCA was $740,000. Net book value at year-end was $1,440,000, while UCC was $1,046,000. c) The estimated costs of the warranty program were $574,000, and the cash paid out was $484,000. The liability had a balance of
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started