ABC Inc. has just completed its 2021 taxation year ending December 31, 2021. Using ASPE, the accountant has determined that the Company has experienced a business loss of $120,000 before income taxes. The accountant provides the following information that was used in the determination of the net accounting loss:
Instructions:
For each "question", provide the effect on the reconciliation of Net Loss for Accounting Purposes to minimum Net Business Income/Loss for Tax Purposes.
ABC Inc. has just completed its 2021 taxation year ending December 31, 2021. Using ASPE, the accountant has determined that the Company has experienced a business loss of $120,000 before income taxes. The accountant provides the following information that was used in the determination of the net accounting loss:
Instructions:
For each "question", provide the effect on the reconciliation of Net Loss for Accounting Purposes to minimum Net Business Income/Loss for Tax Purposes.
ABC Inc. has just completed its 2021 taxation year ending December 31, 2021. Using ASPE, the accountant has determined that the Company has experienced a business loss of $120,000 before income taxes. The accountant provides the following information that was used in the determination of the net accounting loss:
Instructions:
For each "question", provide the effect on the reconciliation of Net Loss for Accounting Purposes to minimum Net Business Income/Loss for Tax Purposes.
q1
Future Income Tax Expense in the amount of $8,800 was deducted to arrive at Net Loss for Accounting Purposes.
1 points
QUESTION 2
The Company has a Class 8 balance of $9,000 at the beginning of 2021 relating to their office furniture. The Company disposed of all remaining assets in Class 8 during the renovation of the office building. The capital cost of these assets was $15,400 and the proceeds of disposition amounted to $5,500. The company has chosen to lease office furniture going forward so no additional Class 8 assets were purchased in the year.
Ignore any accounting loss that would have resulted from this transaction.
2 points
QUESTION 3
The Company has a Class 10.1 UCC balance of $18,200 at the beginning of the year. This balance relates to a passenger vehicle that was purchased for an executive several years ago at a price of $39,000. The vehicle was sold during the year for $12,800. Ignore any accounting loss that would result from this transaction.
2 points
QUESTION 4
The company deducted Bad Debt Expense in the amount of $6,300 on their Income Statement. This amount was the total of actual bad debt write-offs for the year. They did not set up an Allowance for Doubtful Accounts for accounting purposes. For tax purposes, the Company deducted a reserve of $3,000 for the taxation year ending December 31, 2020. A reasonable estimate of doubtful debts for the year ending December 31, 2021 is $5,700.
3 points
