Question
PLEASE HELP ME ASAPPPP 1. For calendar 2020, its first year of operations, Season Ltd. reported pre-tax accounting income of $100,000. Season uses CCA for
PLEASE HELP ME ASAPPPP
1. For calendar 2020, its first year of operations, Season Ltd. reported pre-tax accounting income of $100,000. Season uses CCA for tax purposes and straight-line depreciation for financial reporting. The differences between depreciation and CCA over the five-year life of their assets, and the enacted tax rates for 2020 to 2024 are as follows:
Depreciation
Over (Under) CCA Tax Rates
2020 $ (20,000) 35%
2021 (26,000) 30%
2022 (6,000) 30%
2023 24,000 30%
2024 28,000 30%
There are no other reversible differences. On Season's December 31, 2020 Balance Sheet, the deferred tax liability and the current income taxes payable should be
Deferred Current Income
Tax Liability Taxes Payable
a. $7,000 $28,000.
b. $15,600 $28,000.
c. $6,000 $28,000.
d. $6,000 $24,000.
2. On January 1, 2020, White Inc. purchased a machine for $ 270,000, which will be depreciated $27,000 annually for book purposes. For income tax reporting, the asset is a Class 8 asset with a CCA rate of 20%, subject to the half year rule for 2020. Assume a present and future enacted income tax rate of 30%. What amount should be added to Whites deferred tax liability for the difference between depreciation and CCA at December 31, 2020?
a. $16,200.
b. $9,000.
c. $8,100.
d. $ 0$.
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