The Controller is asking you eight (8) questions regarding your calculation of current Income taxes. Using your completed schedule, answer the Controller's multiple-choice questions 1-8. (1). What is the amount of accounting income? A $450,000 B. $475,000 C$550,000 D. $500,000 1 Answer: (2). The 2020 year non-deductible expenses of $8,000 are considered to be a: A Difference between federal and provincial taxes B. Temporary difference C Difference between IFRS and ASPE D. Permanent difference #2 Answer: (3). What adjustment is needed to accounting income regarding the 2-year advertising service? A Add $37,500 to taxable income. B. Add-back $37,500 to accounting income. C. Add-back $75,000 to accounting income. D. Deduct So from accounting income as the service is completed in 2022. 13 Answer: (4). When adjusting accounting income to taxable income, depreciation expense and capital cost allowance require adjustments. What is the NET adjustment needed [2 marks)? A Deduct $60,000 8. Deduct $12,000 C Add-back $144,000 D. Add-back $12,000. 4 Answer: (5). What tax rate is used to calculate the current income tax expense for the year ended December 31, 2020? A 25% B. 15% C 30% D. 12.5% 5 Answer: (6). Assuming Patio Co. has a positive taxable income, what statement correctly explains the current income tax presentation on the Statement of Financial Position at December 31, 2020? A Patio Co. would show a current asset called income tax receivable. 8. Patio Co. would show a non-current ability called income tax payable. C. Patio Co. would show a current liability called income tax payable. (5). What tax rate is used to calculate the current income tax expense for the year ended December 31, 2020? A. 25% B. 15% C30N D. 12.5% #5 Answers (6). Assuming Patio Co. has a positive taxable income, what statement correctly explains the current income tax presentation on the Statement of Financial Position at December 31, 2020? A Patio Co. would show a current asset called income tax receivable, B. Patio Co. would show a non-current liability called income tax payable, C Patio Co. would show a current liability called income tax payable. D. Patio Co. would show both a current and non-current liability called income tax payable. 6 Answer (7). Which of the following illustrates the journal entry to record the current income taxes on the discontinued loss of $50,000 (2 marks2 Account Title Debit Credit A. Current tax expense discontinued operations 6,250 Current Income tax payable 6,250 6,250 B. Current income tax payable Current tax expense discontinued operations 6,250 Current income tax payable Current tax expense discontinued operations 7,500 7,500 15,000 D. Current tax expense.discontinued operations Current income tax payable 15,000 87 Answer: (8). Patio Co, has a life insurance policy on its president. Assume in 2020, Patio Co. also received non-taxable proceeds of $200,000 because of the unfortunate death of its president. What adjustment would be needed to accounting income regarding the life insurance proceeds? A Deduct $200,000 from accounting income as it is a permanent difference. B. Add back $200,000 to accounting income as it is a permanent difference. C Add-back $200,000 to accounting income as it is a temporary difference D. Deduct $200,000 from accounting Income as it is a temporary difference 88 Answer The Controller is asking you eight (8) questions regarding your calculation of current Income taxes. Using your completed schedule, answer the Controller's multiple-choice questions 1-8. (1). What is the amount of accounting income? A $450,000 B. $475,000 C$550,000 D. $500,000 1 Answer: (2). The 2020 year non-deductible expenses of $8,000 are considered to be a: A Difference between federal and provincial taxes B. Temporary difference C Difference between IFRS and ASPE D. Permanent difference #2 Answer: (3). What adjustment is needed to accounting income regarding the 2-year advertising service? A Add $37,500 to taxable income. B. Add-back $37,500 to accounting income. C. Add-back $75,000 to accounting income. D. Deduct So from accounting income as the service is completed in 2022. 13 Answer: (4). When adjusting accounting income to taxable income, depreciation expense and capital cost allowance require adjustments. What is the NET adjustment needed [2 marks)? A Deduct $60,000 8. Deduct $12,000 C Add-back $144,000 D. Add-back $12,000. 4 Answer: (5). What tax rate is used to calculate the current income tax expense for the year ended December 31, 2020? A 25% B. 15% C 30% D. 12.5% 5 Answer: (6). Assuming Patio Co. has a positive taxable income, what statement correctly explains the current income tax presentation on the Statement of Financial Position at December 31, 2020? A Patio Co. would show a current asset called income tax receivable. 8. Patio Co. would show a non-current ability called income tax payable. C. Patio Co. would show a current liability called income tax payable. (5). What tax rate is used to calculate the current income tax expense for the year ended December 31, 2020? A. 25% B. 15% C30N D. 12.5% #5 Answers (6). Assuming Patio Co. has a positive taxable income, what statement correctly explains the current income tax presentation on the Statement of Financial Position at December 31, 2020? A Patio Co. would show a current asset called income tax receivable, B. Patio Co. would show a non-current liability called income tax payable, C Patio Co. would show a current liability called income tax payable. D. Patio Co. would show both a current and non-current liability called income tax payable. 6 Answer (7). Which of the following illustrates the journal entry to record the current income taxes on the discontinued loss of $50,000 (2 marks2 Account Title Debit Credit A. Current tax expense discontinued operations 6,250 Current Income tax payable 6,250 6,250 B. Current income tax payable Current tax expense discontinued operations 6,250 Current income tax payable Current tax expense discontinued operations 7,500 7,500 15,000 D. Current tax expense.discontinued operations Current income tax payable 15,000 87 Answer: (8). Patio Co, has a life insurance policy on its president. Assume in 2020, Patio Co. also received non-taxable proceeds of $200,000 because of the unfortunate death of its president. What adjustment would be needed to accounting income regarding the life insurance proceeds? A Deduct $200,000 from accounting income as it is a permanent difference. B. Add back $200,000 to accounting income as it is a permanent difference. C Add-back $200,000 to accounting income as it is a temporary difference D. Deduct $200,000 from accounting Income as it is a temporary difference 88