A company has income before tax of $200,000. The company also has a temporary difference of $80,000 relating to capital cost allowance (CCA)in excess of depreciation expense recorded for the year. There are no other permanent or temporary differences. The income tax rate is 40%. The taxes payable are:

Question

Quizplus · Accepted Answer

Taxes payable are calculated on the income before tax, which is $200,000. At a tax rate of 40%, the taxes payable are $200,000 * 40% = $80,000. However, the temporary difference does not affect the calculation of taxes payable; it affects deferred tax assets or liabilities.

A Company Has Income Before Tax of $200,000