Bonita Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,723,000 for the year ended December 31, 2023 During 2023 , Bonita paid $219,000 for meals and entertainment expenses. In 2020, Bonita's tax accountant made a mistake when preparing the company's income tax return. In 2023 , Bonita paid $26,000 in penalties related to this error. These penalties were not deductible for tax purposes. Bonita 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 , Bonita rented the building to SPK Inc. for two years at $253,000 per year. SPK paid the entire two years' rent in advance. Bonita used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $396,000. For tax purposes, Bonita claimed the maximum capital cost allowance of $621,000. Bonita 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, Bonita accrued $593,000 of warranty expenses: actual expenditures for 2023 were $282,000 with the remaining $311,000 anticipated in 2024 In 2023 , Bonita 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