During Its First Year of Operations,Keen Corp

question 45

Essay

During its first year of operations,Keen Corp.reported the following information:
• Income before income taxes for the year was $650,000 and the tax rate was 25%.
• Depreciation expense was $200,000 and CCA was $100,000.The carrying amount of property,plant,and equipment at the end of the year was $720,000,while UCC was $820,000.
• Warranty expense was reported at $110,000,while actual cash paid out was $60,000.
• $15,000 of expenses included in income were not deductible for tax purposes.
• No other items affected deferred tax amounts besides these transactions.
Requirement:
a.Prepare the journal entries to record income tax expense for the year.
b.Assume Keen reported a loss instead of income in its first year of operations.Explain what accounting policy choices are available to Keen to record the tax implications of the loss,and provide a recommendation.

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Definitions:

Paralanguage

The aspects of spoken communication that do not involve words themselves but rather tone, pitch, loudness, and other vocal qualities that convey meaning.

Time Language

The linguistic expressions and vocabulary related to describing or discussing aspects of time, including duration, sequences, or specific moments.

Gestures

Movements of the body or limbs that express or emphasize ideas or feelings.

Listening Ability

The capacity to accurately receive and interpret messages in the communication process, a crucial element of effective communication.