Question 1

During 20014, JBC had pre-tax accounting income of $8,400, originating taxable amounts of $4,800 and originating deductible amounts of $2,400.Calculate JBC's taxable income for 2014.

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Question 2

JMR Corporation has income before tax of $800,000.Included in this amount are meals and entertainment amounting to $9,000, warranty costs of $100,000 ($65,000 in warranty claims), depreciation $94,000 and dividends from a taxable Canadian Corporation of $15,000.CCA for the year amounted to $90,000.Calculate taxable income.

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Question 3

Explain the difference between a temporary and permanent difference.

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Question 4

JMR Corporation has income before tax of $500,000.Included in this amount are meals and entertainment amounting to $10,000, warranty costs of $80,000 ($20,000 in warranty claims), depreciation $78,000 and dividends from a taxable Canadian Corporation of $20,000.CCA for the year amounted to $90,000.Calculate taxable income.

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Question 5

Provide some arguments for and against the discounting of deferred tax amounts, and explain why these are not discounted.

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Question 6

The following information is available to you: Income before tax $1,540,000, depreciation,
$309,000; CCA, $350,000; tax rate, 40%.Prepare the journal entry to record taxes for the year.(Assume there are no previous tax differences.)

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Question 7

List five items that are temporary differences.

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Question 8

RG Corporation has a temporary difference of $40,000 in 2014.Its tax rate in 2014 is 40% and the government enacted tax rate known at the end of 2014 for 2000 and subsequent years is 45%.What tax rate should be used to calculate the deferred income tax asset or liability?

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Question 9

Briefly explain the three basic issues with respect to inter-period income tax allocation.

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Question 10

EGR Company provided you with the following information:
2013 Net Income: $1,500,000 2014 Net Income: $900,000 2013 Tax rate: 35%
2014 Tax rate: 40%
In addition, the only difference between accounting and tax are warranty costs accrued of $100,000 i 2013.No actual warranty expenses were incurred in 2013 or 2014.Prepare journal entries for 2013 and 2014 to record income tax expense.

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Question 11

KG Company had capital assets with a carrying value of $1,560,000 and a tax value of $1,670,000.In addition they had an accrued warranty liability of $80,000 of which $20,000 had actually been incurred and golf club dues in the amount of $3,000.Calculate the temporary difference deductible (taxable).

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Question 12

Name two conditions necessary for a deferred tax liability to result in an actual cash outflow.

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Question 13

EGR Company provided you with the following information:
2013 Net Income: $1,500,000 2014 Net Income: $900,000 2013 Tax rate: 40%
2014 Tax rate: 35%
In addition, the only difference between accounting and tax are warranty costs accrued of $100,000 i 2013.No actual warranty expenses were incurred in 2013 or 2014.Prepare journal entries for 2013 and 2014 to record income tax expense.

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Question 14

List five permanent differences.

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Question 15

The following information is available to you: Income before tax $1,230,000, depreciation,
$350,000; CCA, $300,000; tax rate, 40%.Prepare the journal entry to record taxes for the year.(Assume there are no previous tax differences.)

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Question 16

ABC Inc.purchased new machinery for $2 million on January 1st, 2014.For accounting purposes, the company depreciates all machinery on a straight-line basis (no salvage value)over a five year period.For tax purposes, CCA on all machinery is taken at a rate of 20%, with half a year's CCA taken in the year of acquisition.The tax rate for 2014 is 40%.The tax rate for years 2015 and later is 35%.Assume that all rates are enacted in the year to which they pertain.Using the shortcut approach, determine the deferred income tax asset or liability at the end of 2014.How (if at all)would your answer change if the tax rate for all years 2014 and beyond were enacted in 2014?

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Question 17

GFH had pre-tax accounting income of $5,600 during 2014.GFH used accelerated depreciation for tax purposes ($4,000)and straight-line depreciation for financial accounting purposes ($800).During 2014 GFH accrued warranty expenses of $3,600 and paid $2,000 cash to honour warranties.GFH's taxable income for 2014 would be (show calculations):

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Question 18

Explain the income tax disclosures required under ASPE.

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Question 19

A company issues $1,000,000, 5-Year bonds on January 1, Year 1.The yield to maturity is 8%, while the bonds provide a coupon rate of 10%, payable once annually on December 31st.The company's tax rate is assumed to be 20% for all years.Prepare the Year deferred tax entries required for Year 2.

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Question 20

KG Company had capital assets with a carrying value of $1,670,000 and a tax value of $1,560,000.In addition they had an accrued warranty liability of $80,000 of which $20,000 had actually been incurred and golf club dues in the amount of $3,000.Calculate the temporary difference deductible (taxable).

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