Question
The following information applies to Lambda Corporation, which reports under IFRS. Prior to 2019, taxable income and accounting income were identical. Accounting income was $210,000
The following information applies to Lambda Corporation, which reports under IFRS.
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Prior to 2019, taxable income and accounting income were identical.
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Accounting income was $210,000 in 2019 and $230,000 in 2020.
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Rent of $90,000 were collected in advance and taxable in 2019 but were not earned and
included in accounting income until 2020.
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Expenses on the 2020 income statement included political contributions of $30,000,
which were not deductible for income tax purposes. (No contributions made in 2019).
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Expenses on the 2019 income statement included $52,000 of estimated warranty costs,
which were not deductible for income tax purposes until 2020.
Required:
1. Compute the taxable income and income tax payable in 2019 and 2020. Assume an average tax rate of 40% for all years. Show all supporting calculations. (6 marks)
2019 | 2020 | |
Accounting Income: | $210,000 | $230,000 |
Taxable Income | ||
Income tax payable |
2. Prepare the journal entries to record income tax expense, deferred taxes and income tax payable in 2019 and 2020 for Lambda. (6 marks)
2019 | Debit | Credit |
2020 Debit Credit
2020 | Debit | Credit |
Please use all rows!
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