The Following Information Relates to the Accounting Income for Withering

question 31

Essay

The following information relates to the accounting income for Withering Press Company (WPC)for the current year ended December 31. $\begin{array}{lr}\text { Income before taxes } & \$ 300,000 \\\text { Dividend income - nontaxable } & 20,000 \\\text { Depreciation } & 120,000 \\\text { CCA } & 100,000 \\\text { Impairment (æe additional info below) } & 150,000 \\\text { Taxrate } & 40 \%\end{array}$ The company had purchased land some years ago for $600,000. Recently, it was discovered that this land is contaminated by industrial pollution. Because of the soil remediation costs required, the value of the land has decreased. For tax purposes, the impairment loss is not currently deductible. In the future when the land is sold, half of any losses is deductible against taxable capital gains (ie., the other half that is not taxable or deductible is a permanent difference).
The deferred income tax liability account on January 1 had a credit balance of $45,000. This balance is entirely related to property, plant, and equipment (PPE).
Required:
Prepare the journal entries to record income taxes for WPC.

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Definitions:

Tissues

Groups of cells with similar structure and function that work together to perform specific activities in the body.

Organs

Structures made up of different tissues that perform specific functions within an organism.

Molecules

The smallest units of a chemical substance that can exist independently while retaining the composition and chemical properties of the substance.

Thrombophlebitis

Inflammation of a vein caused by a blood clot.