Reference no: EM133064407
Question - Kalitta Corporation reported the following information at the beginning of its current fiscal year:
Deferred income tax asset (warranties) $ 4,500 (dr)
Deferred income tax liability (depreciable assets) 10,500 (cr)
During the year, Kalitta reports the following information:
Pre-tax accounting loss was $120,000 and the tax rate was 32% which is expected to remain stable in the future.
Depreciation expense was $70,000 and the CCA was $0. The carrying amount of property, plant, and equipment at the end of the year was $400,000 while the UCC was $435,000;
Warranty expense was reported at $40,000 while actual cash paid out was $30,000. The warranty liability had a year-end balance of $25,000.
No other items affected deferred tax amounts other than these transactions. Any tax losses are to be carried forward.
A non-taxable dividend of $10,000 was received in the year.
Required -
1) Determine the amount of NBV and UCC at the beginning of the year.
2) Determine the tax loss or taxable income for the year.
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