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intermediate2

PC Inc. needs to prepare its corporate income tax return for its first year of operations ending on November 30, 2021. The following list of items resulted in differences between PC Inc.'s accounting income and taxable income: a. Deducted in the calculation of accounting income for the 2021 year is meals and entertainment expense in the amount of $24,750. Note that only of this cost is deductible for tax purposes. b. PC Inc. leased part of its building to A&A Company on a 1-year operating lease, starting September 1, 2021. The rent is $14,130 per month. A&A Company paid 12 months' rent in advance to PC Inc. on September 1, 2021. c. PC Inc. will report the entire amount of rent collected from A&A Company in the calculation of its taxable income for the 2021 year. PC Inc. only included the rent earned during the 2021 year in the calculation of accounting income. d. Deducted in the calculation of accounting income was environmental fines levied by the provincial government in the amount of $47,100. e. During 2021, PC Inc. purchased property, plant, and equipment in the amount of $1,536,600. PC Inc. did not dispose of any of these long-term assets during 2021. f. PC Inc. deducted depreciation expense of $107,200 in the calculation of accounting income for the 2021 year. g. PC Inc. will claim capital cost allowance of $230,490 in the calculation of its taxable income. PC Inc. is a publicly accountable enterprise that follows IFRS. PC Inc. had accounting income of $781,490 for the 2021 year. PC Inc. has a corporate tax rate of 35%. Required: 1. Calculate taxable income and taxes payable for the 2021 year. (4 marks) 2. Determine the amount that will appear on the November 30, 2021 statement of financial position for deferred taxes. (4 marks) 3. Prepare the journal entries to record income taxes for 2021. (2 marks) 4. Prepare the income tax expense section of the income statement for 2021, beginning with the line "Income before income taxes". (2 marks)

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