von Ltd. began business on January 1, 2019 and applies IFRS in it is financial reporting. Devon Ltd. income before income tax for 2019 was $250,000.

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 ltd. Pays $8,000 a year for a membership in a local golf club for the companys best employee for the year.

(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 (foreign corporation operate in foreign country, not paying tax in Canada)

(c) Insurance paid in advance at January 1, 2019 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 from 2019 to 2021.

(d) 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.

(e) Devon deduct from it is accounting income amount of $6,000 for meals and entertainment (only 50% are deductible for tax purposes)

(f) Devon ltd. offers a one-year warranty on all its merchandise sold. Warranty expense for 2019 accrued and deducted for accounting purposes was $18,000. Cash payments on 2019 for warranty repairs were $6,000

(g) Income includes $20,000 capital loss from selling a property during 2019. For tax purposes only 50% of the capital loss is allowable. (Assume the capital gain 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, 2019 (8 marks)

2- Calculate the balance in the deferred tax asset or liability account as at December 31, 2019. (4 marks)

3- Prepare the appropriate journal entries to record current and deferred income tax for 2019. (4 marks)