Reference no: EM132115520
Problem - The following information is available with respect to the income tax accounts of Lamanai Limited as at December 31, 2012:
Tax loss carried forward from 2010 $400,000
Net book value of amortizable capital assets 900,000
Undepreciated capital cost of amortizable capital assets 800,000
Deferred income tax asset (loss-carry-forward) 140,000
Deferred income tax liability (capital assets) 35,000
The following information is available with respect to the company's 2013 operations:
Accounting income before income taxes $450,000
Amortization expense 140,000
Capital cost allowance claimed 100,000
Non-taxable dividend income 80,000
Meals and entertainment expense 40,000
(Only 50% of the meals and entertainment expenses are deductible in determining taxable income.)
The income tax rate for 2013 was 33%.
Required:
Calculate the company's income tax expense for 2013, showing separately the current and deferred income tax amounts.
Prepare a reconciliation between the accounting income before income taxes at the statutory tax rate for the year and the income tax expense reported in the company's income statement for the year.