Reference no: EM132857031

Question - At December 31, 2019, Kilroy Corp. (Kilroy) had the following components in its deferred income tax (DIT) account:

DIT related to warranty liability $19,600 debit

DIT related to property, plant and equipment 147,000 credit

$127,400 credit

Warranty expense to December 31, 2019, was $126,000, and claims paid were $70,000, leaving a $56,000 warranty liability balance in the statement of financial position at December 31, 2019. Also at December 31, 2019, the net book value of capital assets was $1,276,000, and undepreciated capital cost (tax basis) was $856,000. The following information relates to 2020:

1. Accounting income before income taxes was $625,000.

2. Included in revenues is $200,000 that will only be taxable in 2021.

3. Warranty claims paid out for 2020 were $45,000. The December 31, 2020, warranty liability balance was $33,000 after adjusting journal entries were recorded.

4. Depreciation of property, plant and equipment was $287,000. Capital cost allowance claimed was $395,000.

5. One asset was disposed of during 2020 for proceeds of $55,000. The asset's original cost was $100,000, and the net book value on the date of sale was $40,000.

6. There were NO additions to property, plant and equipment during 2020.

7. Dividends received from a taxable Canadian corporation were $5,000.

8. Golf club membership dues paid for Kilroy Corp.'s executives amounted to $20,000.

9. On June 1, 2020, the government unexpectedly changed the income tax rate to 40%, effective for the year ended December 31, 2020.

Required - Calculate the current and deferred portion of income tax expense for the year ended December 31, 2020.