Whitewater Rapids Limited (WRL), a publically accountable, December 31 year-end

company, reported the following data in preparing its provision for income taxes for the

year ended December 31, 2019.

Before tax income from continuing operations: $826,000

Dividends received from taxable Canadian corporations amounted to $5,500.

Other Comprehensive Income, not tax affected, arising from portfolio revaluations:

$60,000

Capital gains on the sale of investments in the current year were $22,000.

Book value and UCC of capital assets at December 31, 2018 was $1,081,000 and

$806,000 respectively and resulted in a deferred tax balance of $85,250.

WRL reported and Asset Retirement Obligation (ARO) of $265,000 at the end of

2018. This balance was increased through associated charges to the income

statement in 2019 by interest expense of $13,250 and cost of sales of $18,000 (no

related ending inventories). The entire ARO is tax deductible only when paid at the

time of actual future environmental restoration.

Depreciation and CCA of $190,000 and $173,500 were recorded respectively in

2019. There were no additions or disposals.

WRL paid, on January 1, 2019 a two year insurance premium of $20,000, amortized

evenly over the two year period.

Interest and penalties levied by CRA in an ongoing tax dispute amounted to $2,000

In 2018, suffered a tax loss resulting of $435,484. Being conservative WRL

recognized no tax asset arising from this loss carry-forward in 2018.

The statutory tax rate for 2019 is 28%. On February 18, 2020, before the 2019

financial statements were approved for release, the statutory rate was increased to

30% for 2020 and the foreseeable number of years.

Intermediate Accounting - Chapter 18 - Online Assignment

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5 - 2020S2 - Student

Required #1:

Prepare, with supporting calculations, the tax provision for White Rock Limited for the year

ended December 31, 2019. Round all amounts to the nearest dollar.

Current income tax reconciliation and calculation of any current taxes payable here (tax

entries later):

Deferred Tax Analysis here (tax entries later):

Item

Tax

Accounting

Temporary

Difference

Ending

DTA/DTL

Beginning

DTA/DTL

Adjust

Workspace for deriving balances to report above:

ALL Tax entries here:

Required #2:

Prepare, in good form, the Statement of Comprehensive income beginning with "income

from continuing operations before tax...".

Whitewater Rapids Limited

Statement of Comprehensive Income (partial)

For the year ended December 31, 2019

Required #3:

What would be the properly classified disclosure on the Statement of Financial

Position in respect of the deferred taxes as at December 31, 2019?

Required #4:

What is the effective tax rate on normal income?

Required #3:

What would be the properly classified disclosure on the Statement of Financial

Position in respect of the deferred taxes as at December 31, 2019?

Required #4:

What is the effective tax rate on normal income?