The following information applies to Cullumber Corporation, which reports under IFRSPrior to 2022, taxable income and accounting income were identical.Accounting income was $1.7 million in 2022 and $142 million in 2023.On January 1, 2022, equipment costing $1.38 million was purchased. It is being depreciated on a straight-line basis over eightyears for financial reporting purposes, and is a Class 8-20 % asset for tax purposes.Tax-exempt interest income of $60,000 was received in 2023.The tax rate is 30% for all periods.Taxable income is expected in all future years.Cullumber had 100,000 common shares outstanding throughout 2023.1.23.4.5.6.7.(a) Calculate the amount of capital cost allowance and depreciation expense for 2022 and 2023, and the corresponding carryingamount and undepreciated capital cost of the depreciable assets at the end of 2022 and 2023.20222023$Capital CostAllowanceeTextbook and MediaList of AccountsUndepreciatedCapital CostDepreciationExpenseNet BookValue

To claim CCA, a business must keep records of the capital assets they have purchased, including the…

1. 2 3. Prior to 2022, taxable income and accounting income were identical. Accounting income was $1.7 million in 2022 and $142 million in 2023. On January 1, 2022, equipment costing $1.38 million was purchased. It is being depreciated on a straight-line basis over eight years for financial reporting purposes, and is a Class 8-20 % asset for tax purposes.

1. 2 3. Prior to 2022, taxable income and accounting income were identical. Accounting income was $1.7 million in 2022 and $142 million in 2023. On January 1, 2022, equipment costing $1.38 million was purchased. It is being depreciated on a straight-line basis over eight years for financial reporting purposes, and is a Class 8-20 % asset for tax purposes.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At the end of the year, the deferred tax asset account had a balance of $12 million attributable to a temporary difference of $48 million in a liability for estimated expenses. Taxable income is $68 million. No temporary differences existed at the beginning of the year, and the tax rate is 25% Prepare the journal entry(s) to record income taxes, assuming it is more likely than not that three-fourths of the deferred tax asset will not ultimately be realized. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 2 Record the income tax expense. Note: Enter debits before credits. Transaction General Journal Debit Credit
The following is governed by an income tax rate of 25% . Depreciation rate is determined using MACRS A company is considering two alternatives Choice 1 : Amachine is purchased for 60,000. It is a 5 year property class. It will be used for 10 years after which it will have a salvage value of 15,000. It is mostly grey with a metallic steel cover. The Before Tax Cash Flow will be 80,000 per year. The machine is purchased from Retained Earning cash outright. It has no extra deductions associated with it. Choice 2: A machine is purchased for 65,000. It is a 10 year property class object. It will be used for 12 years with a salvage value of 18,000. It is mostly blue with a white cover. The Before Tax Cash Flow will be 86,000 per year. The machine is purchased from Retained Earnings Cash Outright. It receives an additional allowance for environmental effects of 5000/yr. The allowance is not taxed. and is not included in the 86,000 BTCF.
On the 30 June 2021 B Ltd had a balance of $198,000 in its deferred tax liability account and $76,000 in its deferred tax asset account. As of 30 June 2022, the taxable temporary differences totalled $720,000 and the deductible temporary differences totalled $330,000. Accounting profit before tax for the year ended 30 June 2022 was $900,000. This profit includes entertainment expense $200,000; government grants $30,000; accounting depreciation $7,500 (tax depreciation $5,500); warranty expense $2,000 (cash payment $1,000). Assume a current tax rate of 30%. Requirement: a) Calculate the current tax liability for the year ended 30 June 2022 and prepare the journal entry to record the current tax in the books. [Narrations are not required] b) Calculate the deferred tax liability and deferred tax asset on 30 June 2022 and prepare the journal entry to record the deferred tax amounts. [Narrations are not required]
The following information applies to Pharoah Corporation, which reports under IFRS. 1. Prior to 2022, taxable income and accounting income were identical. 2 Accounting income was $1.7 million in 2022 and $1.41 million in 2023. 3. On January 1, 2022, equipment costing $1.59 million was purchased. It is being depreciated on a straight-line basis over eight years for financial reporting purposes, and is a Class 8-20% asset for tax purposes. 4. Tax-exempt interest income of $70,000 was received in 2023. 5. The tax rate is 30% for all periods. 6. Taxable income is expected in all future years. 7. Pharoah had 100,000 common shares outstanding throughout 2023. (a) Your answer is partially correct. Calculate the amount of capital cost allowance and depreciation expense for 2022 and 2023, and the corresponding carrying amount and undepreciated capital cost of the depreciable assets at the end of 2022 and 2023. 2022 2023 Capital Cost Allowance 159000 286200 +A Undepreciated Capital Cost 1431000…
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Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 $380 24 (96) Cumulative Temporary Difference Deferred Tax Liability $308 ($ in millions) 2023 2024 2022 $400 24 (0) (0) $415 $450 24 24 (0) $424 $439 $474 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…
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