Solution-Calculate income tax expense for each quarter

Calculate income tax expense for each quarter

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Question - HB Company is a private company with a significant amount of long-term debt. The company reports under IFRS. One of the conditions of the debt-financing indenture is that it must provide quarterly financial statements to the lender. HB pays tax at the rate of 25% on the first $200,000 of income and 40% on any income in excess of $200,000. During 20X5, the company earned $500,000 and paid tax at an average rate of 34.545%. Similar results were expected for 20X6.

HB realized the following actual results for the year ended December 31, 20X6 (in thousands):

Quarter	Income (loss)
1	$100
2	(150)
3	200
4	400

Required - Calculate income tax expense (recovery) for each quarter in 20X6 and for the year in total under the:

a. discreet approach

b. integral approach

Reference no: EM133106887

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Calculate income tax expense for each quarter

Reference no: EM133106887

Reference no: EM133106887

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