1. Prior to 2022, taxable income and accounting income were identical. 2. Accounting income was $1.7 million in 2022 and $1.41 million in 2023. 3. On January 1, 2022, equipment costing $1.59 million was purchased. It is being depreciated on a straight-line basis over eight years for financial reporting purposes, and is a Class 8-20% asset for tax purposes. 4. Tax-exempt interest income of $70,000 was received in 2023. 5. The tax rate is 30% for all periods. 6. Taxable income is expected in all future years. 7. Pharoah had 100,000 common shares outstanding throughout 2023.
1. Prior to 2022, taxable income and accounting income were identical. 2. Accounting income was $1.7 million in 2022 and $1.41 million in 2023. 3. On January 1, 2022, equipment costing $1.59 million was purchased. It is being depreciated on a straight-line basis over eight years for financial reporting purposes, and is a Class 8-20% asset for tax purposes. 4. Tax-exempt interest income of $70,000 was received in 2023. 5. The tax rate is 30% for all periods. 6. Taxable income is expected in all future years. 7. Pharoah had 100,000 common shares outstanding throughout 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following information applies to Pharoah Corporation, which reports under IFRS.
1.
Prior to 2022, taxable income and accounting income were identical.
2.
Accounting income was $1.7 million in 2022 and $1.41 million in 2023.
3.
On January 1, 2022, equipment costing $1.59 million was purchased. It is being depreciated on a straight-line basis over eight
years for financial reporting purposes, and is a Class 8-20 % asset for tax purposes.
Tax-exempt interest income of $70,000 was received in 2023.
4.
5.
The tax rate is 30% for all periods.
6.
Taxable income is expected in all future years.
7.
Pharoah had 100,000 common shares outstanding throughout 2023.
(a)
Your answer is partially correct.
Calculate the amount of capital cost allowance and depreciation expense for 2022 and 2023, and the corresponding carrying
amount and undepreciated capital cost of the depreciable assets at the end of 2022 and 2023.
2022
$
2023
Capital Cost
Allowance
Undepreciated
Capital Cost
159000
$
286200
Depreciation
Expense
1431000
$
1144800
Net Book
198750
$
198750
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