Reference no: EM132917729

Question - For the year ended December 31, 2020, Sunland Ltd. reported income before income taxes of $195,200. Prior to 2020 taxable income and accounting income was the same each year.

In 2020, Sunland Ltd. paid $123,900 for advertising; of this amount, $41,300 was expensed in 2020. The remaining $82,600 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2021-2022 period. The full $123,900 was deductible for tax purposes in 2020.

The company paid $30,100 in 2020 for membership in a local golf club (which was not deductible for tax purposes).

In 2020 Sunland Ltd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2020 were $24,400, of which $18,800 was actual repairs for 2020 and the remaining $5,600 was estimated repairs to be completed in 2021.

Meal and entertainment expenses totalled $41,000 in 2020, only half of which were deductible for income tax purposes.

Depreciation expense for 2020 was $100,500. Capital Cost Allowance (CCA) claimed for the year was $130,600. Depreciation and CCA relate to an asset that was purchased on January 1, 2020 for $502,500.

Sunland was subject to a 25% income tax rate for 2020. Sunland follows IFRS.

Required -

1. Calculate taxable income and taxes payable for 2020.

2. Prepare the journal entries to record 2020 income taxes (current and deferred)?