Reference no: EM132919738

Question - Multi-Task Corporation follows IFRS and earned accounting income before taxes of $495,300 for the year ended December 31, 2021.

During the 2021 year, Multi-Task deducted expenses from accounting income for meals and entertainment. The non-deductible portion for tax purposes was $78,000 .

Multi-Task owned a factory building for which it had no current use, so the company chose to use the building as a rental property . At the beginning of the 2021 year, Multi-Task rented the building to Prosperous Company for 2 years at $54,500 per year. Prosperous Company paid the entire 2 years rent in advance.

Multi-Task used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $288,700. For tax purposes, Multi-Task claimed the maximum capital cost allowance of $375,000. All property, plant and equipment were purchased at the beginning of the current year for $2,995,000. Included in Multi-Task's 2021 accounting income was warranty expense of 265,100.

This warranty expense will be deductible in the calculation of taxable income as follows : $66,275 in 2021, and $ 198,825, in 2022. Multi-Task did not provide warranties on any of its products prior to the 2021 year. Included in Multi-Task's accounting income for 2021 are golf and social club dues in the amount of $4,496.

The tax rate is 25 % for all taxation years.

Required -

1. Calculate taxable income and income taxes payable for 2021.

2. Determine the amount that will appear on the December 312021 balance sheet for deferred income 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"