Practice Problem 2 (25 minutes) Tony Inc., a publicly accountable entity, had $1,000,000 in accounting income before DOMAMIA STAICS taxes at year end, including the following: BORSA Dividends received from a taxable Canadian corporation during the year totalled $53,000 Warranty expenses for the year were $85,000. No costs were incurred to service the warranties. This is a new warranty that was introduced in the current fiscal year. Depreciation expense for the year was $172,500. There were no asset purchases and equipment was disposed of during the year for $215,000. The accounting gain on sale was $70,000, and the original cost was $300,000. SMO Interest and penalties on the previous year's corporate taxes, which Tony paid late, were $4,200. Biance en la Other information: gronborgu bangla CCA claimed was $225,000. ee Semois The undepreciated capital cost (UCC) balance at the beginning of the year was $1,250,000, and the net book value of capital assets was $1,495,000. The company has an income tax rate of 30% for the current and future years. The tax rate at the end of the previous year was 28%. enten For tax purposes, the disposition of capital assets is recorded at the lower of cost and proceeds and there was no gain/loss on the disposal of the equipment for tax purposes as a balance still remained in that CCA class. 2009 e Required: beta a) Calculate taxable income, current income tax, and the balance in the deferred income tax account at year end. AUBE VS b) Prepare the journal entries to record the provision for income taxes. c) Prepare a partial statement of comprehensive income, starting with the line profit before taxes. d) Show how the deferred income tax (DIT) account would be presented on the statement of financial position. e) Show how the DIT account would be presented if the entity had adopted ASPE and used the future income tax method to account for income taxes. Practice Problem 2 (25 minutes) Tony Inc., a publicly accountable entity, had $1,000,000 in accounting income before DOMAMIA STAICS taxes at year end, including the following: BORSA Dividends received from a taxable Canadian corporation during the year totalled $53,000 Warranty expenses for the year were $85,000. No costs were incurred to service the warranties. This is a new warranty that was introduced in the current fiscal year. Depreciation expense for the year was $172,500. There were no asset purchases and equipment was disposed of during the year for $215,000. The accounting gain on sale was $70,000, and the original cost was $300,000. SMO Interest and penalties on the previous year's corporate taxes, which Tony paid late, were $4,200. Biance en la Other information: gronborgu bangla CCA claimed was $225,000. ee Semois The undepreciated capital cost (UCC) balance at the beginning of the year was $1,250,000, and the net book value of capital assets was $1,495,000. The company has an income tax rate of 30% for the current and future years. The tax rate at the end of the previous year was 28%. enten For tax purposes, the disposition of capital assets is recorded at the lower of cost and proceeds and there was no gain/loss on the disposal of the equipment for tax purposes as a balance still remained in that CCA class. 2009 e Required: beta a) Calculate taxable income, current income tax, and the balance in the deferred income tax account at year end. AUBE VS b) Prepare the journal entries to record the provision for income taxes. c) Prepare a partial statement of comprehensive income, starting with the line profit before taxes. d) Show how the deferred income tax (DIT) account would be presented on the statement of financial position. e) Show how the DIT account would be presented if the entity had adopted ASPE and used the future income tax method to account for income taxes
