Whispering Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,726,000 for the year ended December 31, 2023. During 2023, Whispering paid $208,000 for meals and entertainment expenses. In 2020, Whispering's tax accountant made a mistake when preparing the company's income tax return. In 2023, Whispering paid $18,000 in penalties related to this error. These penalties were not deductible for tax purposes. Whispering 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, Whispering rented the building to SPK Inc. for two years at $259,000 per year. SPK paid the entire two years' rent in advance. Whispering used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $400,000. For tax purposes, Whispering claimed the maximum capital cost allowance of $625,000. Whispering 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, Whispering accrued $588,000 of warranty expenses: actual expenditures for 2023 were $278,000 with the remaining $310,000 anticipated in 2024. In 2023, Whispering 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. (a) * Your answer is incorrect. Calculate the amount of any permanent differences for 2023. Permanent differences $ 435000
Whispering Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,726,000 for the year ended December 31, 2023. During 2023, Whispering paid $208,000 for meals and entertainment expenses. In 2020, Whispering's tax accountant made a mistake when preparing the company's income tax return. In 2023, Whispering paid $18,000 in penalties related to this error. These penalties were not deductible for tax purposes. Whispering 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, Whispering rented the building to SPK Inc. for two years at $259,000 per year. SPK paid the entire two years' rent in advance. Whispering used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $400,000. For tax purposes, Whispering claimed the maximum capital cost allowance of $625,000. Whispering 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, Whispering accrued $588,000 of warranty expenses: actual expenditures for 2023 were $278,000 with the remaining $310,000 anticipated in 2024. In 2023, Whispering 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. (a) * Your answer is incorrect. Calculate the amount of any permanent differences for 2023. Permanent differences $ 435000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Give me correct answer with explanation h
Transcribed Image Text:Whispering Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,726,000 for the year
ended December 31, 2023.
During 2023, Whispering paid $208,000 for meals and entertainment expenses.
In 2020, Whispering's tax accountant made a mistake when preparing the company's income tax return. In 2023, Whispering paid
$18,000 in penalties related to this error. These penalties were not deductible for tax purposes.
Whispering 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, Whispering rented the building to SPK Inc. for two years at $259,000 per year. SPK paid the entire
two years' rent in advance.
Whispering used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $400,000. For
tax purposes, Whispering claimed the maximum capital cost allowance of $625,000.
Whispering 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, Whispering accrued $588,000 of warranty expenses: actual expenditures for 2023 were
$278,000 with the remaining $310,000 anticipated in 2024.
In 2023, Whispering 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.
(a)
* Your answer is incorrect.
Calculate the amount of any permanent differences for 2023.
Permanent differences $
435000
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