The records for Buffalo Ltd. show the following data for calendar 2023:

1.  Gross profit from the long-term construction contract was $50,000.  This contract is expected to be completed in two years.

2.  Golf club dues were $3,800.

3.  Machinery was acquired in January 2023 for $300,000. Buffalo uses straight-line depreciation over a ten-year life (no residual value). For tax purposes, Buffalo uses CCA at 14% for 2023.  (Ignore the half-year rule).

4.  Dividends received from a Canadian corporation were $4,000.

5.  The estimated warranty liability related to 2023 sales was $19,600. Warranty repair costs paid during 2023 were $13,600. The remainder will be paid in 2024.

6.  Pre-tax accounting income is $250,000. The enacted income tax rate is 25%.

7.   Buffalo follows IFRS.

Instructions

a)  Prepare a schedule (starting with pre-tax accounting income) to calculate taxable income. 

b)  Prepare the required entries to record income taxes for 2023.  Buffalo pays the current year income tax expense when the tax return is filed. 

c)   With proper title, prepare the income tax expense section of the income statement for 2023, beginning with the line “Income before income tax”. 

d)  Reconcile the statutory and effective rates of income tax for 2023.  Round the rates to two decimal places. 

e)  With proper title, provide the statement of financial position presentation for any resulting deferred tax accounts at December 31, 2023.  Be specific about the classification. (