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Problem 1 (12 Marks) Engage Ltd., at the end of 2023, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable
| Problem 1 (12 Marks) | |||||||||
| Engage Ltd., at the end of 2023, its first year of operations, prepared a | |||||||||
| reconciliation between pre-tax accounting income and taxable income as follows: | |||||||||
| Pre-tax accounting income .................................................... $300,000 | |||||||||
| Excess CCA claimed for tax purposes .................................. (600,000) | |||||||||
| Estimated expenses deductible when paid ............................ 500,000 | |||||||||
| Taxable income ..................................................................... $200,000 | |||||||||
| Use of the depreciable assets will result in taxable amounts of $200,000 in each of the next three years. | |||||||||
| The estimated expenses of $500,000 will be deductible in 2026 when settlement is expected to be made. | |||||||||
| The enacted tax rate is 25% and is to increase to 28%, starting in 2024. | |||||||||
| Instructions: | |||||||||
| a) Prepare a schedule of the deferred taxable and deductible amounts. | |||||||||
| b) Prepare the required adjusting entries to record income taxes for 2023. |
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Financial Accounting A Business Perspective
Authors: Roger H. Hermanson, James Don Edwards
7th Edition
0072289988, 978-0072289985
