For the year ended December 31, 2023, Sheffield Ltd. reported income before income taxes of $197,200. Prior to 2023 taxable income and accounting income was the same each year. In 2023, Sheffield Ltd. paid $108,300 for advertising; of this amount, $36,100 was expensed in 2023. The remaining $72,200 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2024-2025 period. The full $108,300 was deductible for tax purposes in 2023. The company paid $29,800 in 2023 for membership in a local golf club (which was not deductible for tax purposes). In 2023 Sheffield Ltd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2023 were $25,700, of which $20,700 was actual repairs for 2023 and the remaining $5,000 was estimated repairs to be completed in 2024. Meal and entertainment expenses totalled $40,800 in 2023, only half of which were deductible for income tax purposes. Depreciation expense for 2023 was $100,400. Capital Cost Allowance (CCA) claimed for the year was $131,300. Depreciation and CCA relate to an asset that was purchased on January 1, 2023 for $502,000. Sheffield was subject to a 25% income tax rate for 2023. Sheffield follows IFRS.

For the year ended December 31, 2023, Sheffield Ltd. reported income before income taxes of $197,200. Prior to 2023 taxable income and accounting income was the same each year. In 2023, Sheffield Ltd. paid $108,300 for advertising; of this amount, $36,100 was expensed in 2023. The remaining $72,200 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2024-2025 period. The full $108,300 was deductible for tax purposes in 2023. The company paid $29,800 in 2023 for membership in a local golf club (which was not deductible for tax purposes). In 2023 Sheffield Ltd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2023 were $25,700, of which $20,700 was actual repairs for 2023 and the remaining $5,000 was estimated repairs to be completed in 2024. Meal and entertainment expenses totalled $40,800 in 2023, only half of which were deductible for income tax purposes. Depreciation expense for 2023 was $100,400. Capital Cost Allowance (CCA) claimed for the year was $131,300. Depreciation and CCA relate to an asset that was purchased on January 1, 2023 for $502,000. Sheffield was subject to a 25% income tax rate for 2023. Sheffield follows IFRS.

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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