Reference no: EM133095667
Question - Schreiber Corporation needs to prepare its corporate income tax return for its first year of operations ending on November 30, 2021.
The following list of items resulted in differences between Schreiber Corporation's accounting income and taxable income:
1. During 2021, Schreiber Corporation purchased property, plant, and equipment in the amount of $1,147,400. Schreiber Corporation did not dispose of any of these long-term assets during 2021.
2. Schreiber Corporation deducted depreciation expense of $143,425 in the calculation of accounting income for the 2021 year.
3. Schreiber Corporation will claim capital cost allowance of $114,740 in the calculation of its taxable income.
4. Deducted in the calculation of accounting income were environmental fines levied by the provincial government in the amount of $15,960.
5. Schreiber Corporation leased part of its building to Yellowstone Industries on a 3-year operating lease, starting July 1, 2021. The rent is $2,750 per month. Yellowstone Industries paid 8 months' rent in advance to Schreiber Corporation on July 1, 2021.
6. Schreiber Corporation will report the entire amount of rent collected from Yellowstone Industries in the calculation of its taxable income for the 2021 year. Schreiber Corporation only included the rent earned during the 2021 year in the calculation of accounting income.
7. Deducted in the calculation of accounting income for the 2021 year is meals and entertainment expense in the amount of $7,792. Note that only ½ of this cost is deductible for tax purposes.
Schreiber Corporation is a publicly accountable enterprise that follows IFRS.
Schreiber Corporation had accounting income of $435,864 for the 2021 year.
Schreiber Corporation has a corporate tax rate of 20%.
Required -
1. Calculate taxable income and taxes payable for the 2021 year.
2. Determine the amount that will appear on the November 30, 2021 statement of financial position for deferred taxes.
3. Prepare the journal entries to record income taxes for 2021.
4. Prepare the income tax expense section of the income statement for 2021, beginning with the line "Income before income taxes".