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Clorong Enterprises Ltd., a private company following ASPE earned accoun

Clorong Enterprises Ltd., a private company following ASPE earned accoun

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Skysong Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,712,000 for the year ended December 31, 2023. During 2023, Skysong paid $240,000 for meals and entertainment expenses. 4 In 2020, Skysong's tax accountant made a mistake when preparing the company's income tax return. In 2023, Skysong paid $17,000 in penalties related to this error. These penalties were not deductible for tax purposes. Skysong owned a warehouse building for which it had no current use, so the company chose to use the building as a rental property. At the beginning of 2023, Skysong rented the building to SPK Inc. for two years at $260,000 per year. SPK paid the entire two years' rent in advance. Skysong used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $396,000. For tax purposes, Skysong claimed the maximum capital cost allowance of $621,000, Skysong began to sell its products with a two-year warranty against manufacturing defects in 2023 to match a warranty introduced by its main competitor. In 2023, Skysong accrued $578,000 of warranty expenses: actual expenditures for 2023 were $277,000 with the remaining $301,000 anticipated in 2024. In 2023, Skysong was subject to a 35% income tax rate. During the year, the federal government announced that tax rates would be decreased to 33% for all future years beginning January 1, 2024. EN LE
Transcribed Image Text:Skysong Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,712,000 for the year ended December 31, 2023. During 2023, Skysong paid $240,000 for meals and entertainment expenses. 4 In 2020, Skysong's tax accountant made a mistake when preparing the company's income tax return. In 2023, Skysong paid $17,000 in penalties related to this error. These penalties were not deductible for tax purposes. Skysong owned a warehouse building for which it had no current use, so the company chose to use the building as a rental property. At the beginning of 2023, Skysong rented the building to SPK Inc. for two years at $260,000 per year. SPK paid the entire two years' rent in advance. Skysong used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $396,000. For tax purposes, Skysong claimed the maximum capital cost allowance of $621,000, Skysong began to sell its products with a two-year warranty against manufacturing defects in 2023 to match a warranty introduced by its main competitor. In 2023, Skysong accrued $578,000 of warranty expenses: actual expenditures for 2023 were $277,000 with the remaining $301,000 anticipated in 2024. In 2023, Skysong was subject to a 35% income tax rate. During the year, the federal government announced that tax rates would be decreased to 33% for all future years beginning January 1, 2024. EN LE
Calculate the amount of any temporary differences for 2023. Temporary differences $
Transcribed Image Text:Calculate the amount of any temporary differences for 2023. Temporary differences $
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