Question 3:06 marks) Devon Ltd began business on January 1, 2018 and applies IFRS in it is financial reporting Devon Ltd income before income tax for 2020 was $250,000, and the balance in Deferred Tax Liab at Dec 31, 2019 was $10,000 (Credit) The following items caused the only differences between accounting income before income taxes and net income for tax purposes for the year ended Dec 31, 2018 (a) Devon Itd. Pays $2,500 a year for a membership for the company's best employee for the year. (Entertainment, and clubs not permitted under tax rules) (6) Accounting income includes dividends received from taxable Canadian corporations were $5,000 in the year. Also, 5.000 dividends from their investments in non-Canadian corporation (not paying tax in Canada) Tax laws allowed the deduction of dividend received from Tusable Canadian companies () Insurance paid in advance on January 1, 2020 totaled $60,000 for a three-year period On this day, the full amount was reported as prepaid insurance for accounting purposes. Devon Ltd. will report the insurance expense for accounting purposes on accrual basis; evenly over the next three years, (d) December 31, 2020 rent collected in advance totaled $75,000 for a three-year period. The full amount of rent was reported as unearned revenue for accounting purposes on the December 31, 2020 Statement of Financial Position. Devon Ltd, will report the rental revenue for accounting purposes as it is eamed, evenly over the next three years (e) Devon Ltd, paid a $1,200 interest penalty for late income tax instalments. The interest penalty is not deductable for tax purposes at any time. The following items caused the only differences between accounting income before income taxes and net income for tax pupones for the year ended Dec 31, 2018 (a) Devon Itd. Pays $2,500 a year for a membership for the company's best employee for the year. (Entertainment, and clubs not permitted under a miles) (b) Accounting income includes dividends received from taxable Canadian corporations were $5,000 in the year Also, 5.000 dividends from their investments in non-Canadian corporation (not paying tax in Canada). Tax laws allowed the deduction of dividend received from Taxable Canadim companies () Insurance paid in advance on January 1, 2020 totaled $60,000 for a three-year period On this day, the full amount was reported as prepaid insurance for accounting purposes. Devon Ltd will report the insurance expense for accounting purposes on accrual basis evenly over the next three years (d) December 31, 2020 rent collected in advance totaled $75,000 for a three year period. The full amount of rent was reported as unearned revenue for accounting purposes on the December 31, 2020 Statement of Financial Position, Devon Lid will report the rental revenue for accounting purposes as it is earned, evenly over the next three years (e) Devon Ltd, paid a $1,200 interest penalty for late income tax instalments. The interest penalty is not deductible for tax purposes at any time (1) Devon deducts from it is accounting income amount of $6,000 for meals and entertainment (only 50% se deductible for tax purposes) (@) Devon Itd. offers a one-year warranty on all its merchandise sold Warranty expense for 2020 accrued and deducted for accounting purposes was $18,000. Cash payments on 2020 for warranty repairs were $6,000 (h) Income includes $20,000 capital loss from selling a property during 2020 For tax purposes only 50% of the capital gain loss should included in income. (Assume the capital gain loss calculated same for tax and accounting purposes) The tax rates are 25% for 2019 and subsequent years. The tax rates are enacted and have been known for the past two years Required: 1. Calculate Devon current tax expense/payable for the year ended Dec 31, 2020 (6 marks) 2- Calculate the balance in the deferred tax asset or liability account as at December 31, 20. (6 marks 3. Prepare the appropriate journal entries to record current and deferred income tax for 2020. (4 marks)