At the End of 2020, Its First Year of Operations

question 38

Multiple Choice

At the end of 2020, its first year of operations, Halifax Corp. prepared the following reconciliation between pre-tax accounting income and taxable income: $$\begin{array} { l r } \text { Pre-tax account ing income } & \$ 800,000 \\\text { Estimated lawsuit expense } & 400,000 \\\text { Excess CCA for tax purposes } & ( 900,000 ) \\\text { Taxable income } & \$ 300,000\end{array}$$ The estimated lawsuit expense of $ 400,000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $ 300,000 in each of the next three years. The income tax rate is 25% for all years. Halifax adheres to IFRS requirements. The deferred tax liability to be recorded is

• A) $ 225,000.
• B) $ 200,000.
• C) $ 100,000.
• D) $ 0.

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Definitions:

Mentally Rotating

The cognitive capacity to rotate two-dimensional or three-dimensional objects within one's mind, which is a skill related to spatial visualization and intelligence.

Structured Questioning

A methodical approach to questioning that follows a defined set of rules or format, often used to obtain specific information or insights.

Piaget's Procedures

Research methods developed by Jean Piaget to study cognitive development in children, involving tasks that reveal patterns of thinking and understanding.

Conservation

The act of preserving natural resources and the environment for future generations.