Reference no: EM133017690
Question - Leonard Inc, a publicly listed company, began operations on January 1, 2020. The following information is available regarding Leonard's December 31, 2021 fiscal year-end:
On January 1, 2020, Leonard purchased equipment costing $300,000. For financial reporting purposes, it was amortized on a straight-line basis over 4 years with no residual value. For tax purposes, this asset is in Class 8 which has a 20% CCA rate and is eligible for the Accelerated Investment Incentive (AII).
Income before tax as reported on the 2021 income statement was $690,000.
Dividends in the amount of $22,500 were received from investments in Canadian corporations in 2021. This amount was included in accounting income. These dividends are not taxable.
Leonard Inc. had meals and entertainment expenses of $17,000.
The tax rate was 26% for 2021 and prior years. During 2021, the federal government announced that the tax rate would be reduced to 23% for 2022 and future years.
Taxable income is considered likely in all future years.
Required -
a) Calculate taxable income and income taxes for 2021. Please complete the full DTA/DTL tax schedule for full marks. Show your calculations in an organized manner.
b) Prepare the journal entries to record 2021 current and deferred income taxes in accordance with IFRS.
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