Reference no: EM132656051

Pearson Corp., a publicly accountable company, provides IT consulting services. Its accounting income before tax for the year ended December 31, 20X5, was $200,000. The following items were included in accounting income before tax:

• dividend income from taxable Canadian companies totalling $25,000
• 100% of meals and entertainment expenses for the year of $7,000
• penalties and fines of $2,250 incurred due to Pearson's late filing of federal taxes
• depreciation expense on equipment owned by Pearson totalling $17,050 for the year

Problem 1: CCA on equipment owned by Pearson was calculated to be $14,500. Pearson's income tax rate for 20X5 was 35%. The tax rate is unchanged from previous years. Opening net book value of depreciable assets was $100,000 and opening UCC was $65,000. What is the total income tax expense for the year?

a) $63,263
b) $64,155
c) $65,047
d) $72,013