Reference no: EM132908056
Question - Whispering Enterprises Ltd. earned accounting income before taxes of $1,721,000 for the year ended December 31, 2017.
During 2017, Whispering paid $209,000 for meals and entertainment expenses.
In 2014, Whispering's tax accountant made a mistake when preparing the company's income tax return. In 2017, Whispering paid $25,000 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 2017, Whispering rented the building to SPK Inc. for two years at $255,000 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 $406,000. For tax purposes, Whispering claimed the maximum capital cost allowance of $631,000.
Whispering sold its products with a two-year warranty against manufacturing defects. In 2017, Whispering accrued $585,000 of warranty expenses: actual expenditures for 2017 were $277,000 with the remaining $308,000 anticipated in 2018.
In 2017, Whispering was subject to a 33% income tax rate and follows IFRS. During the year, the federal government announced that tax rates would be decreased to 31% for all future years beginning January 1, 2018.
Required - Prepare the journal entries to record current and future income taxes for 2017.
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