Question 1:

Item Permanent Temporary Why?

1.Golf Clubs not deductible for tax purposes

2.Depreciation of PPE versus CCA

3.Warranty liabilities for which only the actual amount

of cash paid is deductible for tax purposes

4.Percentage of completion income that is taxable

only once the contract is complete

5.Dividends received that are not taxable

Question 2:

Identify whether each of the following items would cause income taxes payable to be higher or lower than income tax expense.

Item Higher Lower Why?

1.Rent Revenue collected in advance that is taxable in the year received

2 CCA that exceeds the depreciation expense for PPE

3 Membership dues that are not deductible

4 Percentage of completion income that is taxable only once the contract is

complete

5 Dividends received that are not taxable