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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.
- Prior to 2019, taxable income and accounting income were identical.
- Accounting income was $210,000 in 2019 and $230,000 in 2020.
- Rent of $90,000 were collected in advance and taxable in 2019 but were not earned and included in accounting income until 2020.
- 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).
- 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.
2. Prepare the journal entries to record income tax expense, deferred taxes and income tax payable in 2019 and 2020 for Lambda.
2019 2020 Accounting Income: $210,000 $230,000 Taxable Income Income tax payable
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1 Calculation of Taxable income 2019 2020 210000 230000 Pretax accounting income Permanent differenc...Get Instant Access to Expert-Tailored Solutions
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