50.1K

Verified Solution

Link Copied!

Anthony Ltd$.$ began business on January $1,2022.$ At December $31,2022,$ it had a $\backslash (\backslash$$ $58,500\backslash )$ balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired on July $1,2022,$ at a cost of $\backslash (\backslash$$ $900,000\backslash ).$ The property, plant, and equipment is being depreciated on a straight$-$line basis over six years for financial reporting purposes, and is a Class $8-20\backslash \%$ asset for tax purposes. Anthony's income before income tax for $2023$ was $\backslash (\backslash$$ $60,000\backslash ).$ Anthony follows IFRS.

The following items caused the only differences between accounting income before income tax and taxable income in $2023.$

$1.$ In $2023,$ the company paid $\backslash (\backslash$$ $56,250\backslash )$ for rent; of this amount, $\backslash (\backslash$$ $18,750\backslash )$ was expensed in $2023.$ The other $\backslash (\backslash$$ $37,500\backslash )$ will be expensed equally over the $2024$ and $2025$ accounting periods. The full $\backslash (\backslash$$ $56,250\backslash )$ was deducted for tax purposes in $2023.$

$2.$ Anthony pays $\backslash (\backslash$$ $9,000\backslash )$ a year for a membership in a local golf club for the company's president.

$3.$ Anthony now offers a one$-$year warranty on all its merchandise sold. Warranty expenses for $2023$ were $\backslash (\backslash$$ $9,000\backslash ).$ Cash payments in $2023$ for warranty repairs were $\backslash (\backslash$$ $4,500\backslash ).$

$4.$ Meals and entertainment expenses $($only $\backslash (50\backslash \%\backslash )$ of which are ever tax deductible$)$ were $\backslash$$$12,000$ for $2023.$

$5.$ The maximum allowable CCA was taken in $2023.$ There were no asset disposals for $2023.$ Assume the PPE is considered "eligible equipment" for purposes of the Accelerated Investment Incentive $($under the AlI, instead of using the half$-$year rule, companies are allowed a first$-$year deduction using $1\mathrm{.}5$ times the standard CCA rate$).$

Income tax rates have not changed since the company began operations.

$($b$)$

Calculate income tax payable for $2023.$

Income tax payable $

$($c$)$

prepare the journal entries to record income taxes for $2023$

$($D$)$

prepared the income tax expense section of the income statement for $2023,$ beginning with the line "income before income tax"

$($E$)$

indicate how deferred taxes should be presented on the December $31,2023$ statement of financial position

$($F$)$

how would your response to parts a to e change if Anthony reported under ASPE?

Show all imagesShow all images

Answer & Explanation Solved by verified expert

See Answer