Required: a) Calculate taxable income and taxes payable for the 2020 year. b) Determine the amounts and classifications that will appear on the December 31, 2020 statement of financial position for deferred taxes. c) Prepare the journal entries to record income taxes for 2020.
Accounting for Income Taxes
Yoda Company is in the process of accounting for its income taxes for the year ended December 31, 2020. The following information came from Yoda's accounting and
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Accounting income before income taxes for 2020 |
$ 98,967 |
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$ 222,227 |
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Capital cost allowance to be claimed on Yoda's 2020 income tax return |
$ 244,450 |
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Book value of property, plant, and equipment at December 31, 2019 |
$ 1,399,268 |
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Undepreciated capital cost of property, plant, and equipment at December 31, 2019 |
$ 1,203,370 |
Assume that there were no additions or disposals of property, plant, and equipment during 2020.
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In 2020, Yoda began offering a 1-year warranty on all merchandise sold. Following are details pertaining to this warranty: |
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Warranty expense for 2020 for accounting purposes |
$ 38,860 |
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Cost of warranty repairs actually paid in 2020 |
$ 25,259 |
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Cost of warranty repairs expected to be completed in 2021 |
$ 13,601 |
The company paid the following amount in 2020 for a membership in a local golf club: $ 69,880
In 2020, Yoda received royalty revenue from several of its customers. Some of this revenue was included in accounting income for the 2020 year, with the remaining amount to be recognized equally over 2021 and 2022. All royalties received were included in taxable income in 2020.
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Total amount of royalties received from customers |
$ 71,424 |
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Amount reported as royalty revenue for accounting purposes for the 2020 year |
$ 23,808 |
Yoda's tax rate for the 2020 is as follows: 28%
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Yoda follows IFRS, and had the following balance in its December 31, 2019 |
$ 54,851 |
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Required: |
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a) |
Calculate taxable income and taxes payable for the 2020 year. |
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b) |
Determine the amounts and classifications that will appear on the December 31, 2020 |
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c) |
Prepare the |
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d) |
Prepare the income tax expense section of the income statement for 2020, beginning with |
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the line "Income before income taxes". |
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