203
7/25/2019 sm ch (18).doc http://slidepdf.com/reader/full/sm-ch-18doc 1/203 Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition CHAPTER 18 INCOME TAXES ASSIGNMENT CLASSIFICATION TABLE Topics Brief Exercises Exercises Problems ri!i"# Assi#"me"!s 1. Income taes from a !usiness "ers"ecti#e. 1 $ %. &ifference !et'een accounting income and taa!le income, calculate taa!le income. %, (, $, ) 1, %, (, $, ), *, +, , -, 1, 11, 1%, 1(, 1$, 1), 1*, 1+, 1, 1- 1, %, (, ), *, +, , -, 1, 11, 1(, 1$, 1) 1, %, ( (. Taa!le tem"orary differences, calculation of deferred/future income ta lia!ilities. $, *, + $, ), *, +, , -, 1, 11, 1% 1, %, (, ), *, +, , -, 1(, 1$, 1) $. &educti!le tem"orary differences, calculation of deferred/future income ta assets. , - $, ), *, +, , 1(, 1$, 1), 1*, 1+ 1, %, (, ), *, +, , -, 1(, 1$, 1) ). &eferred/future income ta !alances. (, $, ), *, +, -, 1, 11 ), *, +, , -, 1, 11, 1%, 1(, 1$, 1), 1*, 1+, 1 1, (, $, ), *, +, , -, 1, 11, 1(, 1$, 1) *. Multi"le ta rates, ta rate changes. 1% 1%, 1*, 1+, 1-, % %, (, $, 1$ ), * +. 0oss carry!acks. 1(, 1$, 1), 1*, 1+ %1, %%, %(, %$ 1% olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CHAPTER 18

INCOME TAXES

ASSIGNMENT CLASSIFICATION TABLE

Topics

Brief Exercises Exercises Problems

ri!i"#Assi#"me"!s

1. Income taes froma !usiness"ers"ecti#e.

1 $

%. &ifference !et'eenaccounting incomeand taa!leincome, calculatetaa!le income.

%, (, $, ) 1, %, (, $, ),*, +, , -, 1,11, 1%, 1(,1$, 1), 1*,1+, 1, 1-

1, %, (, ),*, +, , -,1, 11, 1(,1$, 1)

1, %, (

(. Taa!le tem"orarydifferences,calculation ofdeferred/futureincome ta

lia!ilities.

$, *, + $, ), *, +, ,-, 1, 11, 1%

1, %, (, ),*, +, , -,1(, 1$, 1)

$. &educti!letem"orarydifferences,calculation ofdeferred/futureincome ta assets.

, - $, ), *, +, ,1(, 1$, 1),1*, 1+

1, %, (, ),*, +, , -,1(, 1$, 1)

). &eferred/futureincome ta!alances.

(, $, ), *, +,-, 1, 11

), *, +, , -,1, 11, 1%,1(, 1$, 1),

1*, 1+, 1

1, (, $, ),*, +, , -,1, 11, 1(,

1$, 1)

*. Multi"le ta rates,ta rate changes.

1% 1%, 1*, 1+,1-, %

%, (, $, 1$ ), *

+. 0oss carry!acks. 1(, 1$, 1),1*, 1+

%1, %%, %(, %$ 1%

olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

ASSIGNMENT CLASSIFICATION TABLE $CONTIN%E&'

Topics

Brief Exercises Exercises Problems

ri!i"#Assi#"me"!s

. 0oss carryfor'ards. 1$, 1), 1*,1+

%%, %(, %$ 1%, 1)

-. 3aluation ofdeferred/future taasset.

%$, %), %*

1. 4resentation anddisclosure ofincome taes.

1, 1-, %,%1

%$, %+, %,%-, (, (1

1, %, (, $,), *, +, ,-, 1, 11,1%, 1(,

1$, 1)

1

11. &ifferences!et'een I56 and

 A4E.

%1, %% 1, %-, (, (1 1, %, (, ),*, +, , -,1, 11,1$

1, %,(, *, +

Ple(se "o!e) T*e sim+lif,i"# (ss-m+!io" is m(.e !*(! (llcom+("ies i" !*e e"./of/c*(+!er brief exercises0exercises (". +roblems -se !*e !erm .eferre.2 r(!*er

!*(" f-!-re2 for !*e !(x/rel(!e. (cco-"!s0 e3e" 4*e"(++l,i"# ASPE5

olutions Manual 12% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

ASSIGNMENT CHARACTERISTICS TABLE

I!em &escri+!io"Le3el of&iffic-l!,

Time$mi"-!es'

E121 Terminology, relationshi"s, calculations,

entries.

im"le 121)

E12% 7ne tem"orary difference through threeyears, one rate.

im"le 121)

E12( Intra"eriod ta allocation. Moderate 1)2%E12$ Identify tem"orary or "ermanent

differences and direction of ad8ustment.im"le 121)

E12) T'o tem"orary differences, future taa!leamounts, one rate, no !eginning deferredtaes.

Moderate %2%)

E12* T'o tem"orary differences, future taa!leamounts, one rate, !eginning deferred

taes.

Moderate %2%)

E12+ T'o tem"orary differences, future taa!leamounts, change in rate.

Moderate %2%)

E12 6e#ersing and "ermanent, future taa!leamounts, no !eginning !alances.

im"le %2%)

E12- 7ne tem"orary difference, future taa!leamounts, one rate, no !eginning deferredtaes, "re"are statements

im"le %2%)

E121 7ne tem"orary difference, future taa!leamounts, one rate, no !eginning deferredtaes.

im"le 1)2%

E1211 7ne tem"orary difference, future taa!leamounts, one rate, !eginning deferredtaes.

im"le 1)2%

E121% 7ne tem"orary difference, future taa!leamounts, change in rate.

im"le 1)2%

E121( 4ermanent and re#ersing differences,calculate taa!le income, entry for incometaes.

im"le 1)2%

E121$ 7ne tem"orary difference, futurededucti!le amounts, one rate, !eginningdeferred taes.

im"le 1)2%

E121) 7ne tem"orary difference, futurededucti!le amounts, one rate, !eginningdeferred taes.

im"le 1)2%

E121* 7ne tem"orary difference, future taa!leamount !ecomes future deducti!leamount, change in rate.

Moderate %2%)

E121+ 7ne tem"orary difference, futurededucti!le amounts, change in rate

Moderate %2%)

olutions Manual 12( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

ASSIGNMENT CHARACTERISTICS TABLE $CONTIN%E&'

I!em &escri+!io"Le3el of&iffic-l!,

Time$mi"-!es'

E121 &e"reciation, tem"orary difference o#erfi#e years, determine taa!le income,taes "aya!le method.

Moderate $2$)

E121- &eferred ta lia!ility, change in ta rate. Com"le 1)2%E12% 7ne difference, multi"le rates, !eginning

deferred taes, change in rates.im"le %2%)

E12%1 0oss carry!ack and carryfor'ard.. Moderate %2%)E12%% Carry!ack and carryfor'ard of ta losses. im"le 1)2%E12%( 0oss carry!ack and carryfor'ard. Com"le (2()E12%$ 0oss carry!ack and carryfor'ard using

#aluation allo'ance.Moderate (2()

E12%) &eferred ta asset, different amounts to !ereali9ed. Moderate %2%)

E12%* &eferred ta asset, different amounts to !ereali9ed using #aluation allo'ance.

Moderate %2%)

E12%+ Three differences, classify deferred taes. im"le 121)

E12% Intra"eriod ta allocation. Moderate %)2(E12%- Taes "aya!le method2taes "aya!le

re"orting disclosures.im"le 121)

E12( Taes "aya!le method. im"le 121)E12(1 Taes "aya!le method. Moderate 1)2%

olutions Manual 12$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

ASSIGNMENT CHARACTERISTICS TABLE $CONTIN%E&'

I!em &escri+!io"Le3el of&iffic-l!,

Time$mi"-!es'

4121 Three tem"orary differences and t'o

"ermanent differences, o"ening !alance,statement disclosure.

Moderate (2()

412% i differences, three years, t'o ta rates,income and statement of financial "ositionre"orting.

 Com"le $)2)

412( 5our differences, one rate, reconciliation of !alances and com"arati#e statementdisclosure, reconcile ta rate.

Com"le )2*

412$ 7ne tem"orary difference, tracked for fouryears, one "ermanent difference, changein rate.

Com"le )2*

412) econd year of de"reciation difference,t'o differences, single rate, earnings "ershare.

Moderate $2$)

412* e#eral differences, t'o years, re#ersingdifferences, one rate, discontinuedo"erations and financial statements.

Com"le )2*

412+ T'o differences, t'o years, re#ersingdifferences, t'o assum"tions, se#eralrates and financial statements.

Com"le $2$)

412 Three differences, se#eral rates, t'o yearsand statement disclosure.

Com"le )2*

412- T'o differences, t'o rates, future incomee"ected. Moderate %)2(

4121 T'o differences, t'o years, calculatetaa!le income and "re2ta accountingincome.

Com"le $2)

41211 5i#e differences, one year, income andretained earnings re"orting, and effecti#eta rate.

Com"le )2*

4121% 0osses carry!ack and carryfor'arde"ected to !e reali9ed and not e"ectedto !e reali9ed.

Moderate ()2$

4121( 4rior "eriod error correction, reco#ery of"rior year taes, income statement andretained earnings statements disclosure.

Moderate ()2$

4121$ 7ne timing difference, change in ta rate,calculation of effecti#e ta rate, all entriesand !alance sheet "resentation under

 A4E and I56

Moderate )2*

olutions Manual 12) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

ASSIGNMENT CHARACTERISTICS TABLE $CONTIN%E&'

I!em &escri+!io"Le3el of&iffic-l!,

Time$mi"-!es'

4121) 0oss carry!ack 'ith timing and "ermanent

differences and a ta rate change. The ta!enefit for only half of the losscarryfor'ard can !e recogni9ed. :ournalentries and ta reconciliation note isre;uired.

Com"le *2+)

olutions Manual 12* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

SOL%TIONS TO BRIEF EXERCISES

BRIEF EXERCISE 18/1

$(' Hi#*er i"come !(x ex+e"se res-l!s i" lo4er +rofi!s5

$b' Hi#*er i"come !(xes +(i. .ecre(ses c(s* flo4 fromo+er(!io"s5

$c' Co"si.eri"# o"l, !*e effec! of i"come !(xes0 F(ber s*o-l.re#is!er i!s com+(", i" E(s!er" E-ro+e0 4*ere !*ecom+(", 4o-l. be s-b6ec! !o ( lo4er cor+or(!e i"come!(x r(!e5

BRIEF EXERCISE 18/7

719 !(x(ble i"come :1;80T(x r(!e X 7<=17>?1>719 i"come !(x +(,(ble : 9;0<

olutions Manual 12+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/?

Acco-"!i"# i"come :1<@0

Perm("e"! .iffere"ce i"s-r("ce ex+e"se <0

1@10Re3ersi"# .iffere"ce) CCA &e+reci(!io" $190'

T(x(ble i"come :190

C-rre"! i"come !(xes (! 7<= : ?@0<

S!m! of $T(x(ble' &eferre.

Fi" Pos Tem+or(r, T(x T(x

Acco-"! &iffere"ce X R(!e $Li(bili!,'

$c*("#e i"' $c*("#e i"'PP D E $:190' 7<= $:?0<'

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exerciseo"l, !*e "e! c*("#e i" !*e !em+or(r, .iffere"ce is #i3e"5

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ?@0<I"come T(x P(,(ble555555555555555555555555555555555555 ?@0<

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 ?0<

&eferre. T(x Li(bili!,5555555555555555555555555555555555 ?0<5555555555555555555555555555555555555555555555555555555555555555555555

olutions Manual 12 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/9

T*e :90 re3ersi"# .iffere"ce !*(! occ-rs i" !*e firs! fisc(l,e(r of A"-#r(*(m Cor+5 res-l!s i" ( !(x(ble !em+or(r,.iffere"ce (! &ecember ?10 7195 T*e c(rr,i"# (mo-"! is #re(!er !*(" !*e %CC $!(x b(se' b, :90 X ?<= !(x r(!e :190.eferre. !(x li(bili!,5

S!m! of $T(x(ble' &eferre.

Fi" Pos Tem+or(r, T(x T(x

Acco-"! &iffere"ce X R(!e $Li(bili!,'

PP D E $:90' ?<= $:190'

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exerciseo"l, !*e "e! .iffere"ce is +ro3i.e.5

BRIEF EXERCISE 18/<

&i3i.e. b,

 Acco-"!i"#

7<= I"come

Acco-"!i"# i"come :1<@0 :?;0 7<5=No"/.e.-c!ible

i"s-r("ce ex+e"se <0 107< 58=  : 907< 7<58=

Effec!i3e !(x r(!e $:907<>:1<@0' 7<58=

BRIEF EXERCISE 18/@ 

B(l("ce $T(x(ble' &efe

S*ee! T(x C(rr,i"# Tem+or(r, T(x T(Acco-"! B(se Amo-"! &iffere"ce X R(!e $Li(b

E-i+5 :1190 :19<0 $?10' ?= $;0?

olutions Manual 12- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/

Acco-"!i"# i"come : 7<0

Re3ersi"# .iffere"ce) CCA &e+rec5 $90'T(x(ble i"come 7?<0

X ?<=

I"come !(x +(,(ble : 8707<

S!m! of $T(x(ble' &eferre.

Fi" Pos Tem+or(r, T(x T(x

Acco-"! &iffere"ce X R(!e $Li(bili!,'

PP D E $:90' ?<= $:190'

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0o"l, !*e "e! .iffere"ce is +ro3i.e.5

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 8707<I"come T(x P(,(ble555555555555555555555555555555555555 8707<

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 190

&eferre. T(x Li(bili!,5555555555555555555555555555555555 190

BRIEF EXERCISE 18/8

B(l("ce &e.-c!ible &ef

S*ee! T(x C(rr,i"# Tem+or(r, T(x T

Acco-"! B(se Amo-"! &iffere"ce X R(!e As

(rr("!,Li(bili!, : $10' :10 X 7<= :97

olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/;

C-rre"! !(x ex+e"se for 719 :0&eferre. !(x be"efi! for 719

&eferre. !(x (sse!0 17>?1>719 :@70&eferre. !(x (sse!0 17>?1>71? 90 $770'

Total income tax expense for 2014 $48,000

BRIEF EXERCISE 18/1

C-rre"! !(x ex+e"se for 719 :<?0&eferre. !(x ex+e"se for 719

&eferre. !(x li(bili!,0 17>?1>719 :<70&eferre. !(x li(bili!,0 17>?1>71? ?<0 10

Total income tax expense for 2014 $70,000

BRIEF EXERCISE 18/11

 Je(r F-!-re !(x(ble (mo-"! R(!e &eferre. !(xli(bili!,

71<

71@

71

:<?0 

?10 

?<70

7<=

7<=

?1=

: 1?07< 

0<

 

1;017:1;;08

BRIEF EXERCISE 18/17

&eferre. T(x Asse!555555555555555555555555555555555555555555 <90&eferre. T(x Be"efi!55555555555555555555555555555555 <90

$:700 X 7='

olutions Manual 1211 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/1?

I"come T(x Recei3(ble55555555555555555555555555555555555555555551890<C-rre"! T(x Be"efi! 55555555555555555555555555555555555555555 1890<

 

K:1?@0< $:1@0 X ?=' :1890<

BRIEF EXERCISE 18/19

I"come T(x Recei3(ble5555555555555555555555555555555555555555551@10C-rre"! T(x Be"efi! 555555555555555555555555555555555555555 1@10

$:9@0 X ?<='

&eferre. T(x Asse!5555555555555555555555555555555555555555555555555 970

&eferre. T(x Be"efi! 55555555555555555555555555555555555555 

970K$:<80 :9@0' X ?<=

BRIEF EXERCISE 18/1<

$('I"come T(x Recei3(ble55555555555555555555555555555555555555 1@10

C-rre"! T(x Be"efi! 555555555555555555555555555555555555 1@10$:9@0 X ?<='

$b'I"come T(x Recei3(ble55555555555555555555555555555555555555 1@10

C-rre"! T(x Be"efi! 555555555555555555555555555555555555 1@10$:9@0 X ?<='

&eferre. T(x Asse!55555555555555555555555555555555555555555555 970&eferre. T(x Be"efi! 5555555555555555555555555555555555 970

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555 970

Allo4("ce !o Re.-ce &eferre. T(xAsse! !o Ex+ec!e. Re(li(ble (l-e5555 970

$:170 X ?<='

olutions Manual 121% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/1@

$('C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 80<

I"come T(x P(,(ble555555555555555555555555555555555555 

80<

I"come T(x P(,(ble55555555555555555555555555555555555555555555 80<C-rre"! T(x Be"efi!5555555555555555555555555555555555555   80<

$:7<0 X ?<='

$b'&eferre. T(x Ex+e"se555555555555555555555555555555555555555555 80<

&eferre. T(x Asse!555555555555555555555555555555555555555 80<

Allo4("ce !o Re.-ce &eferre. T(x

Asse! !o Ex+ec!e. Re(li(ble (l-e55555555555555 80<&eferre. T(x Be"efi! 5555555555555555555555555555555555 80<

$:7<0 X ?<='

BRIEF EXERCISE 18/1

$('&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 0

&eferre. T(x Asse!55555555555555555555555555555555555555 0

$b'&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 0

Allo4("ce !o Re.-ce &eferre. T(xAsse! !o Ex+ec!e. Re(li(ble (l-e5 0

olutions Manual 121( Cha"ter 1

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BRIEF EXERCISE 18/18

%"re(lie. G(i" or Loss / OCI555555555555555555555555555 90F/OCIInvestments555555555555555555555555555555555555 90

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 107&eferre. T(x Be"efi! / OCI55555555555555555555555555 107

$:90 X ?='

Ne! i"come :<<0O!*er com+re*e"si3e i"come)

%"re(lie. loss0 F/OCI i"3es!me"!s :90

Less) &eferre. !(x be"efi! $107' 708

Com+re*e"si3e i"come :<707

BRIEF EXERCISE 18/1;

$('I"come before i"come !(x :7?0I"come !(x ex+e"se

C-rre"! :9?0&eferre. 70 0 

Ne! i"come :1@0

$b' Effec!i3e !(x r(!e :0>:7?0 ?59=

olutions Manual 121$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

BRIEF EXERCISE 18/7

I"come from co"!i"-i"# o+er(!io"s beforei"come !(x : 10

I"come !(x ex+e"se 10<

I"come from co"!i"-i"# o+er(!io"s<?07<

&isco"!i"-e. o+er(!io"s)

Loss from .isco"!i"-e. o+er(!io"s :10

Less) (++lic(ble i"come !(x s(3i"#s 70< 0<

Ne! i"come : 9<0<

BRIEF EXERCISE 18/71

$(' C-rre"! (sse!s  &eferre. !(x (sse! :190Lo"#/!erm li(bili!ies  &eferre. !(x li(bili!, :@;0

$b' Lo"#/!erm li(bili!ies  &eferre. !(x li(bili!, :<<0

BRIEF EXERCISE 18/77

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ?@0<I"come T(x P(,(ble555555555555555555555555555555555555 ?@0<

olutions Manual 121) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

SOL%TIONS TO EXERCISES

E<E6CIE 121 $1/1< mi"-!es'

$(' #re(!er !*("$b' less !*("$c' ?90 $:@0 .i3i.e. b, 7<='$.' (re "o!$e' less !*("$f' be"efi! :1<0$#' :80< K$:10 X 7<=' :1@0<$*' .ebi!$i' :<;0 $:870 :7?0'

$6' 4ill "o! be$Q' be"efi!$l' i"cre(se0 i"cre(se$m' !em+or(r,0 re3ersi"#

olutions Manual 121* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12% $1/1< mi"-!es'

$('&e.-c!ibleTem+or(r,

  Je(r 

  Amo-"! of Tem+or(r, &iffere"ceOri#i"(!i"# or Re3ersi"# .-ri"# !*e Je(r 

&iffere"ce (! Je(r/E".

71971<71@

:1@0 :79<0 :8<0 ori#i"(!i"#:1?;0 :1710 :180 re3ersi"#:1?10 :17<0 :@0 re3ersi"#

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i"come !o excee. +re/!(x (cco-"!i"# i"come5 T*erefore0 i"!*e +erio.$s' of re3ers(l0 4e c(" ex+ec! +re/!(x (cco-"!i"#i"come !o excee. !(x(ble i"come5

olutions Manual 121+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/? $1</7 mi"-!es'

$('%"re(lie. G(i" or Loss / OCI555555555555555555555555555 780

F/OCI I"3es!me"!s555555555555555555555555555555555555 780

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 809&eferre. T(x Be"efi! / OCI55555555555555555555555555 809K$:780 X ?=' :

$b'F/OCI I"3es!me"!s55555555555555555555555555555555555555555555 ??0<

%"re(lie. G(i" or Loss / OCI55555555555555555555 ??0<$:780 :<0<'

&eferre. T(x Ex+e"se / OCI5555555555555555555555555555555 10<&eferre. T(x Asse!55555555555555555555555555555555555555 809&eferre. T(x Li(bili!,5555555555555555555555555555555555 10@<$:<0< X ?='

B(l("ce0 &ec5 ?10 71<) $:<0< X ?=' :$10@<' LB(l("ce before (.6-s!me"! 809 AA.6-s!me"! !o .eferre. !(x (sse!>li(bili!, (cco-"!

(". 71< .eferre. !(x ex+e"se / OCI :10<

$c'H("# Tec*"olo#ies I"c5

S!(!eme"! of Com+re*e"si3e I"come Je(r E".e. &ecember ?10

71< 719Ne! i"come :10 :10O!*er com+re*e"si3e i"come $loss'

%"re(lie. #(i"s $losses' o" F/OCI ??0< $:780'  i"3es!me"!s

Less) &eferre. !(x$ex+e"se' be"efi! $10<' 809

O!*er com+re*e"si3e i"come $loss' 7?09< $1;0@'Com+re*e"si3e i"come :17?09< :809

olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12$ $1/1< mi"-!es'

$(' $b'A.. or .e.-c!

from (cco-"!i"#i"come

15 ii .e.-c!75 i (..?5 iii (..95 i (..<5 ii .e.-c!@5 ii .e.-c!5 i (..85 iii .e.-c!

;5 iii .e.-c!15 i (..115 i (..175 i (..

olutions Manual 121- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/< $7/7< mi"-!es' $('

S!(!eme"! of Fi"("ci(l Posi!io"

&e.-c!ible$T(x(ble'

&eferre.T(x

C-rre"!or 

Acco-"! &ec ?10 719

T(xB(se

C(rr,i"#Amo-"!

Tem+or(r,&iffere"ces

T(xR(!e

Asse!$Li(bili!,'

Lo"#/Term

PP D E :;80 :;?0 <0 7<= : 170< LTCo"s!r-c!io" i" Process ?<0 <0 $1<0' 7<= $?0<' C&eferre. !(x li(bili!,0 &ecember ?10 719&eferre. !(x li(bili!, before (.6-s!me"!I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719

$7<0'

$: 7<0' For !*e com+le!e. co"!r(c! me!*o.0 !*e co"s!r-c!io" i" +rocess (cco-"! re+or!s o"l,

co"s!r-c!io" cos!s excl-.i"# (", #ross +rofi! reco#"ie. -".er !*e +erce"!(#e/of/com+le!io" me!*o.5

$b'

Acco-"!i"# i"come :1;<0

Re3ersi"# .iffere"ces)

Pro+er!,0 +l("!0 (". e-i+me"!)

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Co"s!r-c!io" i" Process)

Gross +rofi!Perce"!(#e com+le!io" $:<0 :?<0' $1<0'

Gross +rofi!Com+le!e. co"!r(c! me!*o. $1<0'

T(x(ble i"come :;<0

C-rre"! i"come !(xes (! 7<= :7?0<

olutions Manual 12% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/< $Co"!i"-e.'

$c'

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 7?0<I"come T(x P(,(ble555555555555555555555555555555555555 7?0<

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 7<0&eferre. T(x Li(bili!,5555555555555555555555555555555555 7<0

$.' I"come before i"come !(x :1;<0I"come !(x ex+e"se

C-rre"! :7?0<&eferre. 7<0 980<

Ne! i"come :19@07<

$e' Refer !o l(s! !4o col-m"s i" !(ble i" +(r! $(' (bo3e5

No"/c-rre"! (sse!s&eferre. !(x (sse! :170<

Current liabilitiesDeferred tax liability 37,500

(f) Non-current liabilitiesDeferred tax liability $25,000

IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies bere+or!e. (s "o"/c-rre"! i!ems o" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 12%1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/@ $7/7< mi"-!es'$('

S!(!eme"! of Fi"("ci(l Posi!io"

&e.-c!ible$T(x(ble'

&eferre.T(x

C-rre"!or 

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! Lo"#/

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,' TermPP D E :@70 :@90 $:70' 7<= $:<0' LTCo"s!r-c!io" i" Process @0 ;90 ( $180' 7<= $9<0' C&eferre. !(x li(bili!,0 &ecember ?10 71<&eferre. !(x li(bili!, before (.6-s!me"!I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 71<

 $<0'  $7<0'$:7<0'

( :?<0 :910 :@0

$b'

Acco-"!i"# i"come :170

Re3ersi"# .iffere"ces)

Pro+er!,0 +l("!0 (". e-i+me"!)

&e+reci(!io" ex+e"se $:9@0 :10' :7;0C(+i!(l cos! (llo4("ce $:;80 :@70' $?@0' $0'

Co"s!r-c!io" i" Process)

Gross +rofi! Perce"!(#e com+le!io" $:990 :910' $?0'

Gross +rofi! Com+le!e. co"!r(c! me!*o.  $?0'

T(x(ble i"come :70

C-rre"! i"come !(xes (! 7<= :<0

olutions Manual 12%% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/@ $Co"!i"-e.'

$c'

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 <0I"come T(x P(,(ble555555555555555555555555555555555555 <0

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 7<0&eferre. T(x Li(bili!,5555555555555555555555555555555555 7<0

$.'71< 719

I"come before i"come !(x :170 :1;<0I"come !(x ex+e"se

C-rre"! <0 7?0<&eferre. 7<0 7<0

  ?0 980<Ne! i"come :;0 :19@07<

$e' Refer !o l(s! !4o col-m"s i" !(ble i" +(r! $(' (bo3e5

71< 719No"/c-rre"! (sse!s

&eferre. !(x (sse! :170<

Current liabilitiesDeferred tax liability $45,000 37,500

Non-current liabilitiesDeferred tax liability 5,000

(f)  2015 2014

Non-current liabilities $50,000 $25,000

IFRS require that all deferred tax assets and liabilities be

reported as non-current items on a classified statement of

financial position.

olutions Manual 12%( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

olutions Manual 12%$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/ $7/7< mi"-!es'

 $('

&ecre(se i"S!(!eme"! of 

Fi"("ci(l Posi!io"&e.-c!ible$T(x(ble'

T(xR(!e

&eferre.T(x

C-rre"!or 

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PP D E :;80 :;?0 :<0 <= $:70<' LTCo"s!r-c!io" i" Process ?<0 <0 $1<0' <= 0< C&ecre(se i" f-!-re !(x li(bili!, .-e !o .ecre(se i" !(x r(!e :<0

Se+!ember 1<0 71< (.6-s!me"! !o recor. !*e im+(c! of !*e .ecre(se i" !(x r(!e o" !*ecom+(",s "e! !(x(ble !em+or(r, .iffere"ce)

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 <0&eferre. T(x Be"efi!55555555555555555555555555555555555 <0

olutions Manual 12%) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/ $Co"!i"-e.'$b'

S!(!eme"! ofFi"("ci(l Posi!io"

&e.-c!ible $T(x(ble'

&eferre.T(x

C-rre"!or 

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! Lo"#/

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,' TermPP D E :@70 :@90 $:70' 7= $:90' LTCo"s!r-c!io" i" Process @0 ;90 $180' 7= $?@0' C&eferre. !(x li(bili!,0 &ecember ?10 71<Se+!5 1< .eferre. !(x li(bili!, before (.6-s!me"! $:7<0 :<0'I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 71<

 $90'  70:$70'

$c'

Acco-"!i"# i"come :170

Re3ersi"# .iffere"ces)

Pro+er!,0 +l("!0 (". e-i+me"!)

&e+reci(!io" ex+e"se $:9@0 :10' :7;0C(+i!(l cos! (llo4("ce $:;80 :@70' $?@0' $0'

Co"s!r-c!io" i" Process)

Gross +rofi! Perce"!(#e com+le!io" $:990 :910' $?0'

Gross +rofi! Com+le!e. co"!r(c! me!*o.  $?0'

T(x(ble i"come :70

C-rre"! i"come !(xes (! 7<= c-rre"! r(!e :<0

olutions Manual 12%* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/ $Co"!i"-e.'

$.'C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 <0

I"come T(x P(,(ble555555555555555555555555555555555555 <0

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$e'71< 719

I"come before i"come !(x :170 :1;<0I"come !(x ex+e"se

C-rre"! <0 7?0<

&eferre. 1<0 7<0  70 980<

Ne! i"come :10 :19@07<

&eferre. !(x ex+e"se for 71< of :1<0 is com+rise. of (f-!-re !(x be"efi! of :<0 .-e !o ( .ecre(se i" !(x r(!eseffec!i3e Se+!ember 1<0 71< (". f-!-re !(x ex+e"se of :70.-e !o .iffere"ces i" !*e +erio. of reco#"i!io" of cer!(i"ex+e"ses for (cco-"!i"# +-r+oses 3ers-s for i"come !(x+-r+oses5

$f' Refer !o l(s! !4o col-m"s i" !(ble i" +(r! $b' (bo3e5

71< 719No"/c-rre"! (sse!s

&eferre. !(x (sse! :170<

Current liabilitiesDeferred tax liability $36,000 37,500

Non-current liabilitiesDeferred tax liability 4,000

olutions Manual 12%+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/ $Co"!i"-e.'

(g)  2015 2014

Non-current liabilitiesDeferred Tax Liability $40,000 $25,000

IFRS require that all deferred tax assets and liabilities be

reported as non-current items on a classified statement of

financial position.

olutions Manual 12% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12 $7/7< mi"-!es'

$('%"re(lie. G(i" or Loss5555555555555555555555555555555555555 70

F/NIInvestments555555555555555555555555555555555555555 70

FV-OCI Investments55555555555555555555555555555555555555555555 90%"re(lie. G(i" or LossOCI5555555555555555555 90

$b' All of C*ris!i"(s i"3es!me"!s m-s! be re+or!e. o" !*es!(!eme"! of fi"("ci(l +osi!io" (! !*eir f(ir 3(l-e5 T*eres-l!i"# .iffere"ce be!4ee" !*is (". !*e !(x b(se of !*ei"3es!me"!s re+rese"!s ( !em+or(r, .iffere"ce5 T*e-"re(lie. #(i" reco#"ie. is "o! !(x(ble0 (". (",

-"re(lie. loss reco#"ie. is "o! .e.-c!ible0 -"!il !*ei"3es!me"!s (re sol. (! ( #(i" or (! ( loss5 T*e res-l!i"#!(x(ble !em+or(r, .iffere"ce m-s! *(3e !*e corres+o".i"#.eferre. !(x recor.e. (! !*e !(x r(!e !*(! C*ris!i"( ex+ec!s!o +(, $or reco3er i" !*e c(se of ( loss' o" !*is #(i" or lossi" f-!-re (cco-"!i"# +erio.s5 I" !*is c(se !*e e"(c!e. r(!eis ?= !*is r(!e "ee.s !o be (++lie. !o (rri3e (! !*e (mo-"!of (", .eferre. !(xes5

olutions Manual 12%- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/8 $Co"!i"-e.'$c'

S!(!eme"! of Fi"("ci(l Posi!io"

&e.-c!ible$T(x(ble'

&eferre.T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

E-i+me"! :80< :80 :< ?= :1<FV-NI Investments @0 <80 70 ?= @

F/OCI I"3es!me"!s 10 <0 $90' ?= $107'&eferre. !(x li(bili!,0 &ecember ?10 719&eferre. !(x (sse!>li(bili!, before (.6-s!me"!I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719

$9<'

$:9<' $CCA is :10 X ?= X ,e(r r-le :10<'

$.'Acco-"!i"# i"come Kexcl-.es e"!ries i" +(r! $(' (s "o !(x effec! :110

Perm("e"! .iffere"ce)

<= of me(ls (". e"!er!(i"me"! of :790 1701770

Re3ersi"# .iffere"ce)

&e+reci(!io" ex+e"se :70

C(+i!(l cos! (llo4("ce $10<' <

T(x(ble i"come :1770<

C-rre"! i"come !(xes (! 7<= :?0@7<

olutions Manual 12( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/8 $Co"!i"-e.'

$e'

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ?0@7<I"come T(x P(,(ble555555555555555555555555555555555555 ?0@7<

&eferre. T(x Asse!555555555555555555555555555555555555555555555 <&eferre. T(x Be"efi!55555555555555555555555555555555555 <

&eferre. T(x Ex+e"seOCI5555555555555555555555555555555 107&eferre. T(x Li(bili!,5555555555555555555555555555555555 107K$:90 X ?=' :

olutions Manual 12(1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12- $7/7< mi"-!es'

$(' T*e i"3es!me"!s m-s! be re+or!e. o" !*e s!(!eme"! of fi"("ci(l +osi!io" (! !*eir f(ir 3(l-e5 T*e res-l!i"#.iffere"ce be!4ee" !*is (". !*e !(x b(se of !*ei"3es!me"!s $cos! of :?1909<' re+rese"!s ( !em+or(r,.iffere"ce5 T*e -"re(lie. #(i" reco#"ie. is "o! !(x(ble0(". (", -"re(lie. loss reco#"ie. is "o! .e.-c!ible0 -"!il!*e i"3es!me"!s (re sol. (! ( #(i" or (! ( loss5 T*eres-l!i"# !(x(ble !em+or(r, .iffere"ce m-s! *(3e !*ecorres+o".i"# .eferre. !(x recor.e. (! !*e !(x r(!e !*(!R(m(" ex+ec!s !o +(, $or reco3er i" !*e c(se of ( loss' o"!*is #(i" or loss i" f-!-re (cco-"!i"# +erio.s5 I" !*is c(se!*e e"(c!e. r(!e is ?= !*(! "ee.s !o be (++lie. !o (rri3e (!

!*e (mo-"! of (", .eferre. !(xes5

$b'

S!m! of $T(x(ble' &eferre.

Fi" Pos T(x C(rr,i"# Tem+or(r, T(x T(x

Acco-"! B(se Amo-"! &iffere"ce X R(!e $Li(bili!,'

I"3es!5$F/NI' :?1909< :?1807 $:?0<' ?= $:1017<'

$c'

Acco-"!i"# i"come :?70Re3ersi"# .iffere"ce) %"re(lie. #(i" o"I"3es!me"!s $F/NI' $?0<'

T(x(ble i"come :7;807<

C-rre"! i"come !(xes (! ?= :8;09<

$.'

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 8;09<I"come T(x P(,(ble555555555555555555555555555555555555 8;09<

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 1017<&eferre. T(x Li(bili!,5555555555555555555555555555555555 1017<

$:1017< o+e"i"# b(l("ce of :'

olutions Manual 12(% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/; $Co"!i"-e.'

$e' I"come before i"come !(x :?70I"come !(x ex+e"se

C-rre"! :8;09<&eferre. 1017< ;0@

Ne! i"come :71109

$f' C-rre"! li(bili!ies)  I"come !(x +(,(ble :8;09<

No"/c-rre"! li(bili!ies)&eferre. !(x li(bili!, : 1017<

%".er IFRS0 (ll .eferre. !(x (sse!s (". li(bili!ies (rere+or!e. (s "o"/c-rre"! i!ems o" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

$#' C-rre"! li(bili!ies)I"come !(x +(,(ble :8;09<&eferre. !(x li(bili!, 1017<

C-rre"! i"come !(xes (re .-e 4ell 4i!*i" 17 mo"!*s of !*es!(!eme"! of fi"("ci(l +osi!io" .(!e0 !*erefore0 !*e, (recl(ssifie. (s ( c-rre"! li(bili!,5

T*e cl(ssific(!io" for !*e .eferre. !(x (cco-"! m-s! (lso bec-rre"! si"ce !*e !em+or(r, .iffere"ce rel(!es !o (" (sse!!*(! is cl(ssifie. (s c-rre"! o" !*e s!(!eme"! of fi"("ci(l+osi!io"5 %".er ASPE0 .eferre. !(x (sse!s (". .eferre. !(xli(bili!ies (re se#re#(!e. i"!o c-rre"! (". "o"/c-rre"!c(!e#ories0 so R(m("s .eferre. !(x li(bili!, 4o-l. be

cl(ssifie. (s c-rre"! o" ( cl(ssifie. s!(!eme"! of fi"("ci(l+osi!io"5

olutions Manual 12(( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

E<E6CIE 121 $1</7 mi"-!es'

$('

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

E-i+me"! $:;<0' : $:;<0' ?= $:780<'

&eferre. !(x li(bili!,0 &ecember ?10 719 $780<'

&eferre. !(x li(bili!, before (.6-s!me"!

I"cre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719 $:780<'

(l-es "o! +ro3i.e. i" !*is exercise $:7<0 :?0 :90 :;<0'

olutions Manual 12($ Cha"ter 1

/   F-!-re ,e(rs

  To!(l 71< 71@ 71

 $T(x(ble' !em+or(r, .iffere"ces

&e+reci(!io" i" excess of CCA :;<0 :7<0 :?0 :90

 T(x r(!e e"(c!e. for !*e ,e(r ?= ?= ?=

 &eferre. !(x li(bili!, :780< :0< :;0 :170

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1 $Co"!i"-e.'

$b' 719

Acco-"!i"# i"come :70

Perm("e"! .iffere"ces) //Re3ersi"# .iffere"ce)

CCA #re(!er !*(" .e+reci(!io" ;<0

T(x(ble i"come 1<0

C-rre"! i"come !(xes ?= :?10<

$c'

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 ?10<

I"come T(x P(,(ble55555555555555555555555555555555555555555 ?10<

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555555 780<Deferred Tax Liability....................................... 28,500

$.' I"come before i"come !(x :70I"come !(x ex+e"se

C-rre"! :?10<&eferre. 780< @0

 

Ne! i"come :190

olutions Manual 12() Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

E<E6CIE 1211 $1</7 mi"-!es'

$(' 71<

S!(!eme"! of &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

E-i+me"! $:0' $:0' ?= $:710'

&eferre. !(x li(bili!,0 &ecember ?10 71< $710'

&eferre. !(x li(bili!, before (.6-s!me"! $780<'

&ecre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71< :0<

(l-es "o! +ro3i.e. i" !*is exercise $:?0 :90 :0'

F-!-re ,e(rs

  To!(l 71@ 71

 $T(x(ble' !em+or(r, .iffere"ces

&e+reci(!io" i" excess of CCA :0 :?0 :90

T(x r(!e e"(c!e. for !*e ,e(r ?= ?=

 &eferre. !(x li(bili!, :710 :;0 :170

olutions Manual 12(* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/11 $Co"!i"-e.'

$(' $Co"!i"-e.' 71@

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71@ B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

E-i+me"! $:90' $:90' ?= $:170'

&eferre. !(x li(bili!,0 &ecember ?10 71@ $:170'

&eferre. !(x li(bili!, before (.6-s!me"! $710'

&ecre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71@ :;0

(l-es "o! +ro3i.e. i" !*is exercise

F-!-re ,e(r 

  To!(l 71

 $T(x(ble' !em+or(r, .iffere"ces

&e+reci(!io" i" excess of CCA :90 :90

T(x r(!e e"(c!e. for !*e ,e(r ?=

 &eferre. !(x li(bili!, :170 :170

olutions Manual 12(+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/11 $Co"!i"-e.'

$b'

71< 71@

Pre/!(x (cco-"!i"# i"come : 180 : 180Re3ersi"# .iffere"ces

CCA U .e+reci(!io" ex+e"se 7<0 ?0

T(x(ble i"come : 7<0 : 710

T(x(ble i"come : 7<0 : 710

E"(c!e. !(x r(!e X ?= X ?=

C-rre"! i"come !(x ex+e"se : @10< : @?0

$c'

71<

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 @10<I"come T(x P(,(ble55555555555555555555555555555555555555555 @10<

&eferre. T(x Li(bili!,5555555555555555555555555555555555555555555555 0<Deferred Tax Benefit........................................ 7,500

71@

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 @?0I"come T(x P(,(ble55555555555555555555555555555555555555555 @?0

&eferre. T(x Li(bili!,5555555555555555555555555555555555555555555555 ;0Deferred Tax Benefit........................................ 9,000

olutions Manual 12( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/11 $Co"!i"-e.'

$.'

71<

I"come before i"come !(x : 180I"come !(x

  C-rre"! : @10<

  &eferre. $Be"efi!' $0<' <90

Ne! I"come : 17@0

71@

I"come before i"come !(x : 180

I"come !(x

  C-rre"! : @?0  &eferre. $Be"efi!' $;0' <90

Ne! I"come : 17@0

$e' T*e "e! i"come is i.e"!ic(l for 71< (". 71@5 Al!*o-#* !*e!em+or(r, b(l("ces *(3e c*("#e.0 !*eir c*("#es 4ere(ccr-e. (! !*e ex+ec!e. !(x r(!es i" 7195 S-bse-e"!re3ers(ls of b(l("ces i" !*e !em+or(r, .iffere"ces re.-ce

!*e .eferre. !(x li(bili!, (cco-"! (! !*e ex+ec!e. (mo-"!se(c* s-bse-e"! ,e(r5

T*is !re". i" "e! i"come is "o! ( coi"ci.e"ce5 T*e "e!i"come rem(i"s co"s!("! .-e !o !*e co"sis!e"! (mo-"! of i"come before i"come !(x5

olutions Manual 12(- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

E<E6CIE 121% $1</7 mi"-!es'

$(' 71<

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

E-i+me"! $:0' $:0' 7<= $:10<'

&eferre. !(x li(bili!,0 &ecember ?10 71< $10<'

&eferre. !(x li(bili!, before (.6-s!me"! $780<'

&ecre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71< :110

(l-es "o! +ro3i.e. i" !*is exercise

F-!-re ,e(rs

  To!(l 71@ 71

 $T(x(ble' !em+or(r, .iffere"ces

&e+reci(!io" i" excess of CCA :0 :?0 :90

T(x r(!e e"(c!e. for !*e ,e(r 7<= 7<=

 &eferre. !(x li(bili!, :10< :0<:10

olutions Manual 12$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/17 $Co"!i"-e.'

$(' $Co"!i"-e.' 71@

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71@ B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

E-i+me"! $:90' $:90' 7<= $:10'

&eferre. !(x li(bili!,0 &ecember ?10 71@ $10'

&eferre. !(x li(bili!, before (.6-s!me"! $10<'

&ecre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71@ : 0<

(l-es "o! +ro3i.e. i" !*is exercise

F-!-re ,e(r 

  To!(l 71

$T(x(ble' !em+or(r, .iffere"ces

&e+reci(!io" i" excess of CCA :90 :90

T(x r(!e e"(c!e. for !*e ,e(r 7<=

&eferre. !(x li(bili!, :10 :10

olutions Manual 12$1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/17 $Co"!i"-e.'

$b'

71< 71@

Pre/!(x (cco-"!i"# i"come : 180 : 180Re3ersi"# .iffere"ces

CCA U .e+reci(!io" ex+e"se 7<0 ?0

T(x(ble i"come : 7<0 : 710

T(x(ble i"come : 7<0 : 710

E"(c!e. !(x r(!e X ?= X 7<=

C-rre"! i"come !(x ex+e"se : @10< : <70<

$c'71<

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 @10<I"come T(x P(,(ble555555555555555555555555555555555555 @10<

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 110Deferred Tax Benefit................................... 11,000

71@

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 <70<I"come T(x P(,(ble555555555555555555555555555555555555 <70<

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 0<Deferred Tax Benefit................................... 7,500

olutions Manual 12$% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/17 $Co"!i"-e.'

$.'

71<

I"come before i"come !(x : 180I"come !(x

  C-rre"! : @10<

&eferre. $be"efi!' $110' <0<

Ne! I"come : 17;0<

71@

I"come before i"come !(x : 180

I"come !(x

  C-rre"! : <70<  &eferre. $be"efi!' $0<' 9<0

Ne! I"come : 1?<0

olutions Manual 12$( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1? $1</7 mi"-!es'

$('Acco-"!i"# i"come :1<0Perm("e"! .iffere"ces)

No"/.e.-c!ible fi"es 1<0170

Re3ersi"# .iffere"ces)Excess of CCA o3er .e+reci(!io"  $1@0'Excess re"! collec!e. o3er re"! e(r"e. 790

T(x(ble i"come :1780C-rre"! i"come !(xes ?= :?809

(b)

S!(!eme"! of &e.-c!ible$T(x(ble'

&eferre.T(x C-rre"! or  

Fi" Pos Tem+or(r, T(x Asse! Lo"#/

Acco-"! &iffere"ces X R(!e $Li(bili!,' Term

PP D E $:1@0' ?= $:908'   LT

%"e(r"e.

  re"! re3e"-e 790 ?= 07 C

Deferred tax asset, Dec. 31, 2014 2,400Deferred tax asset before adjustment 0Incr. in deferred tax asset, and deferred tax benefit for 2014 $ 2,400

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0o"l, !*e "e! .iffere"ce is +ro3i.e.5

$c' C-rre"! T(x Ex+e"se555555555555555555555555555555555555555 ?809I"come T(x P(,(ble555555555555555555555555555555555 ?809

&eferre. T(x Asse!5555555555555555555555555555555555555555555 07&eferre. T(x Be"efi!55555555555555555555555555555555 709&eferre. T(x Li(bili!,5555555555555555555555555555555 908

or ( "e! .ebi! !o &eferre. T(x Asse! of :709

olutions Manual 12$$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1? $Co"!i"-e.'

Bec(-se of ( fl(! !(x r(!e0 !*ese !o!(ls c(" be reco"cile.)$:790 :1@0' X ?= :07 $:908' :7095

$.' I"come before i"come !(x :1<0I"come !(x ex+e"se

C-rre"! :?809&eferre. $be"efi!'   $709' ?@0

Ne! i"come :@;0

$e'

&i3i.e. b, Acco-"!i"#

?= I"come

Acco-"!i"# i"come : 1<0 : ?10< ?5=

No"/.e.-c!ible fi"es 1<0 90< 95?=

  : ?@0 ?95?=

Effec!i3e !(x r(!e $:?@0>:1<0' ?95?=

$f' C-rre"! (sse!s&eferre. !(x (sse! :07

Non-current liabilitiesDeferred tax liability 4,800

(g) Non-current assets  Deferred tax asset $2,400

olutions Manual 12$) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

E<E6CIE 121$ $1</7 mi"-!es'

$('

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

(rr("!, li(bili!, $:1<0' :1<0 7<= :?0<

&eferre. !(x (sse!0 &ecember ?10 719 ?0<

&eferre. !(x (sse! before (.6-s!me"!

I"cre(se i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 719 :?0<

  F-!-re ,e(rs

  To!(l 71< 71@ 71

&e.-c!ible !em+or(r, .iffere"ce

(rr("!, li(bili!, :1<0 :<0 :?<0 :@<0

T(x r(!e e"(c!e. for !*e ,e(r 7<= 7<= 7<=&eferre. !(x (sse! :?0< :170< :80< :1@07<

olutions Manual 12$* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/19 $Co"!i"-e.'

$b' 71@

Acco-"!i"# i"come :1?<0

Perm("e"! .iffere"ces) //Re3ersi"# .iffere"ce)

(rr("!, ex+e"se 4(rr("!, cos!s  i"c-rre. 1<0

T(x(ble i"come 78<0

C-rre"! i"come !(xes 7<= :107<

$c'

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 107<I"come T(x P(,(ble 5555555555555555555555555555555555555555 107<

&eferre. T(x Asse!55555555555555555555555555555555555555555555555555 ?0<Deferred Tax Benefit........................................ 37,500

$.' I"come before i"come !(x :1?<0I"come !(x ex+e"se

C-rre"! :107<

&eferre. $be"efi!' $?0<' ??0< 

Ne! i"come :1107<

olutions Manual 12$+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

E<E6CIE 121) $1</7 mi"-!es'

$(' 71<

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

(rr("!, li(bili!, $:10' :10 7<= :7<0

&eferre. !(x (sse!0 &ecember ?10 71< 7<0

&eferre. !(x (sse! before (.6-s!me"! ?0<

&ecre(se i" .eferre. !(x (sse!0 (". .eferre. !(x ex+e"se for 71< $:170<'

  F-!-re ,e(rs

  To!(l 71@ 71

&e.-c!ible !em+or(r, .iffere"ce

(rr("!, li(bili!,:10

:?<0 :@<0

T(x r(!e e"(c!e. for !*e ,e(r 7<= 7<=

&eferre. !(x (sse! :7<0 :80< :1@07<

olutions Manual 12$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/1< $Co"!i"-e.'

$(' $Co"!i"-e.' 71@

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71@ B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

(rr("!, li(bili!, $:@<0' :@<0 7<= :1@07<

&eferre. !(x (sse!0 &ecember ?10 71@ 1@07<

&eferre. !(x (sse! before (.6-s!me"! 7<0

&ecre(se i" .eferre. !(x (sse!0 (". .eferre. !(x ex+e"se for 71@ $:80<'

  F-!-re ,e(r 

  To!(l 71

&e.-c!ible !em+or(r, .iffere"ce

(rr("!, li(bili!, :@<0 :@<0

T(x r(!e e"(c!e. for !*e ,e(r 7<=&eferre. !(x (sse! :1@07< :1@07<

olutions Manual 12$- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1< $Co"!i"-e.'

$b'

71< 71@

Pre/!(x (cco-"!i"# i"come : 1<<0 : 1<<0Re3ersi"# .iffere"ce (rr("!, cos!s

i"c-rre. 4(rr("!, ex+e"se $<0' $?<0'

T(x(ble i"come : 1<0 : 170

T(x(ble i"come : 1<0 : 170

E"(c!e. !(x r(!e X 7<= X 7<=

C-rre"! i"come !(x ex+e"se : 7@07< : ?0

$c'

71<

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 7@07<I"come T(x P(,(ble 5555555555555555555555555555555555555555 7@07<

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555555 170<Deferred TaxAsset.......................................... 12,500

$&ecre(se i" ASSET0 3er, im+or!("!VVV'71@

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 ?0I"come T(x P(,(ble 5555555555555555555555555555555555555555 ?0

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555555 80<Deferred TaxAsset.......................................... 8,750

olutions Manual 12) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1< $Co"!i"-e.'

$.'

71<

I"come before i"come !(x : 1<<0I"come !(x

  C-rre"! : 7@07<

&eferre. 170< ?80<

Ne! I"come : 11@07<

71@

I"come before i"come !(x : 1<<0

I"come !(x

  C-rre"! : ?0  &eferre. 80< ?80<

Ne! I"come : 11@07<

$e' T*e "e! i"come is i.e"!ic(l for 71< (". 71@5 Al!*o-#* !*e!em+or(r, b(l("ces *(3e c*("#e.0 !*eir c*("#es 4ere(ccr-e. (! !*e ex+ec!e. f-!-re i"come !(x r(!es i" 7195S-bse-e"! re3ers(ls of b(l("ces i" !*e !em+or(r,

.iffere"ces re.-ce !*e .eferre. !(x (sse! (cco-"! (! !*eex+ec!e. (mo-"!s e(c* s-bse-e"! ,e(r5

T*is !re". i" "e! i"come is "o! ( coi"ci.e"ce5 T*e "e!i"come rem(i"s co"s!("! .-e !o !*e co"sis!e"! (mo-"! of i"come before i"come !(x5

olutions Manual 12)1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 121* $7/7< mi"-!es'

$('%"re(lie. G(i" or Loss................................. 70

  F/NI I"3es!me"!s55555555555555555555555555555555 70

$b' As .isc-sse. i" Exercise 18/; !*e .iffere"ce be!4ee" !*ec(rr,i"# (mo-"! $:90' (". !*e !(x b(se $:970' (!&ecember ?10 71< is ( !em+or(r, .iffere"ce5 T*e loss is"o! .e.-c!ible -"!il !*e i"3es!me"!s (re sol.5 T*e res-l!i"#.e.-c!ible !em+or(r, .iffere"ce m-s! *(3e !*ecorres+o".i"# .eferre. !(x recor.e. (! !*e !(x r(!e !*(!R(m(" ex+ec!s !o reco3er o" !*is loss i" f-!-re (cco-"!i"#+erio.s5 I" !*is c(se !*e e"(c!e. r(!e of ?= "ee.s !o be

(++lie. !o (rri3e (! !*e (mo-"! of (", .eferre. !(xes5

$c'

S!m! of &e.-c!ible &eferre.

Fi" Pos T(x C(rr,i"# Tem+or(r, T(x T(x Asse!

Acco-"! B(se Amo-"! &iffere"ce X R(!e $Li(bili!,'

I"3es!5$F/NI' :970 :90 :70 ?= :@

B(l("ce before (.6-s!me"! $1017<'A.65 !o .eferre. !(x (cco-"!0 (". .eferre. !(x be"efi! for 71< :107<

$.'

Acco-"!i"# i"come :170Re3ersi"# .iffere"ce) %"re(lie. loss o" I"3es!5 $F/NI'Re3ersi"# .iffere"ce) 719 %"re(lie. #(i" re(lie. i"71<

  70

  ?0<

T(x(ble i"come :17<0<

C-rre"! i"come !(xes (! ?= :?07<

C-rre"! !(x ex+e"se for 71< :?07<

olutions Manual 12)% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1@ $Co"!i"-e.'

$e'C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ?07<

I"come T(x P(,(ble555555555555555555555555555555555555 ?07<

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 @&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 1017<

&eferre. T(x Be"efi!55555555555555555555555555555555555 107<

Al!er"(!i3el,0 if o"e s!(!eme"! of fi"("ci(l +osi!io" (cco-"!(&eferre. T(x Asse!>Li(bili!, (cco-"!is -se.0 ( .ebi! b(l("cei".ic(!i"# (" (sse! (". ( cre.i! b(l("ce i".ic(!i"# ( li(bili!,0!*e e"!r, 4o-l. be)

&eferre. T(x Asse!>Li(bili!,5555555555555555555555555555555 107<&eferre. T(x Be"efi!55555555555555555555555555555555555 107<

$f' I"come before i"come !(x :170I"come !(x ex+e"se

C-rre"! :?07<&eferre. $be"efi!' $107<' ?@0

Ne! i"come :890

$#' No"/c-rre"! (sse!s&eferre. !(x (sse! :@

IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies bere+or!e. (s "o"/c-rre"! i!ems o" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 12)( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1@ $Co"!i"-e.'

$*'

S!m! of &e.-c!ible &eferre.Fi" Pos T(x C(rr,i"# Tem+or(r, T(x T(x Asse!

Acco-"! B(se Amo-"! &iffere"ce X R(!e $Li(bili!,'

I"3es!5$F/NI' :970 :90 :70 78= :<@

B(l("ce before (.6-s!me"! $1017<'A.65 !o .eferre. !(x (cco-"!0 (". .eferre. !(x be"efi! for71< :10@8<

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ?07<I"come T(x P(,(ble555555555555555555555555555555555555 ?07<

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 <@&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 1017<

&eferre. T(x Be"efi!55555555555555555555555555555555555 10@8<

or &eferre. T(x Asse!>Li(bili!,555555555555555555555555 10@8<

$i' C-rre"! (sse!s&eferre. !(x (sse! :@

T*e cl(ssific(!io" m-s! be c-rre"! si"ce !*e !em+or(r,.iffere"ce rel(!es !o (" (sse! !*(! is cl(ssifie. (s c-rre"! o" !*es!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 12)$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

E<E6CIE 121+ $7/7< mi"-!es'

$(' 71<

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

(rr("!, li(bili!, : $:10' :10 78= :780

&eferre. !(x (sse!0 &ecember ?10 71< 780

&eferre. !(x (sse! before (.6-s!me"! ?0<

&ecre(se i" .eferre. !(x (sse!0 (". .eferre. !(x ex+e"se for 71< $:;0<'

  F-!-re ,e(rs

  To!(l 71@ 71

 &e.-c!ible !em+or(r, .iffere"ce

 (rr("!, li(bili!,:10

:?<0 :@<0

T(x r(!e e"(c!e. for !*e ,e(r 78= 78=

 &eferre. !(x (sse! :780 :;08 :1807

olutions Manual 12)) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/1 $Co"!i"-e.'

$(' $Co"!i"-e.' 71@

S!(!eme"! of    &e.-c!ible  

Fi"("ci(l Posi!io"   $T(x(ble'   &eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 71@ B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

(rr("!, li(bili!, : $:@<0' :@<0 78= :1807

&eferre. !(x (sse!0 &ecember ?10 71@ 1807

&eferre. !(x (sse! before (.6-s!me"! 780

&ecre(se i" .eferre. !(x (sse!0 (". .eferre. !(x ex+e"se for 71@ $:;08'

  F-!-re ,e(r 

  To!(l 71

&e.-c!ible !em+or(r, .iffere"ce

(rr("!, li(bili!, :@<0 :@<0

T(x r(!e e"(c!e. for !*e ,e(r 78=

&eferre. !(x (sse! :1807 :1807

olutions Manual 12)* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/1 $Co"!i"-e.'

$b'71< 71@

Pre/!(x (cco-"!i"# i"come : 1<<0 : 1<<0Re3ersi"# .iffere"ce (rr("!, cos!s

i"c-rre. 4(rr("!, ex+e"se $<0' $?<0'

T(x(ble i"come : 1<0 : 170

T(x(ble i"come : 1<0 : 170

E"(c!e. !(x r(!e X 7<= X 78=

C-rre"! i"come !(x ex+e"se : 7@07< : ??0@

$c'71<

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555 7@07<I"come T(x P(,(ble55555555555555555555555555555555555 7@07<

&eferre. T(x Ex+e"se555555555555555555555555555555555555555 ;0<&eferre. Tax Asset..................................... 9,500

71@

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555 ??0@I"come T(x P(,(ble55555555555555555555555555555555555 ??0@

&eferre. T(x Ex+e"se555555555555555555555555555555555555555 ;08&eferre. Tax Asset..................................... 9,800

olutions Manual 12)+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/1 $Co"!i"-e.'

$.'

71<

I"come before i"come !(x : 1<<0

I"come !(x

  C-rre"! : 7@07<

&eferre. ;0< ?<0<

Ne! I"come : 11;07<

71@

I"come before i"come !(x : 1<<0

I"come !(x

  C-rre"! : ??0@

  &eferre. ;08 9?09

Ne! I"come : 1110@

olutions Manual 12) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/18 $9/9< mi"-!es'

$('B(sic C(lc-l(!io"s of C(+i!(l Cos! Allo4("ce0 Amo-"!s (". B(l("ces)

C B

$A' $B' A B $C' C(rr,i"# Re3ersi"#

 Je(r B(se CCA %CC &e+rec5 Amo-"! &iffere"ce

719 :@0 X 9 = X 5< : 170 : 980 :170 :980 :71< 980 X 9 = 1;70 7880 170 ?@0 $70'

71@ 7880 X 9 = 11<07 1708 170 790 908

71 1708 X 9 = @;017 1?0@8 170 170 <088

718 1?0@8 X 9 = 91097 @7078 170 80<78

 :<?0;7

$b'

719 71< 71@ 71 718

Acco-"!i"# i"come : ?90 :?90 :?90 :?90 : ?90

Re3ersi"# .iffere"ce //

$70

' 908 <088 80<78T(x(ble i"come : ?90 :7@80 :?9908 :?;088 : 9180<78

X ?9 = X ?9 = X ?9 = X ?9 = X ?9 =

I"come !(x +(,(ble :11<0@ :;1017 :1107?7 :1?708;; :1970?

olutions Manual 12)- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/18 $Co"!i"-e.'

$c' (". $.'719

 

S!(!eme"! of 

Fi"("ci(l Posi!io"

  &e.-c!ible

$T(x(ble'

 

&eferre. T(xAcco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

Pro+er!,0 +l("!0 D e-i+me"! :980 :980 ?9= :

&eferre. !(x (sse!>li(bili!,0 &ecember ?10 719

&eferre. !(x (sse!>li(bili!, before (.6-s!me"!

I"cre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719 :

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 11<0@I"come T(x P(,(ble555555555555555555555555555555555555   11<0@$:?90 X ?9=' +(r! $b'

olutions Manual 12* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/18 $Co"!i"-e.'

(c) and (d) continued71<

 

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

 

&eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

Pro+er!,0 +l("!0 D e-i+me"! :7880 :?@0 $70' ?9= $:79098'

&eferre. !(x li(bili!,0 &ecember ?10 71< $79098'

&eferre. !(x li(bili!, before (.6-s!me"!

I"cre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 71< $:79098'

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ;1017I"come T(x P(,(ble555555555555555555555555555555555555   ;1017$:7@80 X ?9=' +(r! $b'

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 79098&eferre. T(x Li(bili!,5555555555555555555555555555555555

 

79098

olutions Manual 12*1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/18 $Co"!i"-e.'

(c) and (d) continued71@

 

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

 

&eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 71@ B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

Pro+er!,0 +l("!0 D e-i+me"! :1708 :790 $:@07' ?9= $:770898'

&eferre. !(x li(bili!,0 &ecember ?10 71@ $770898'

&eferre. !(x li(bili!, before (.6-s!me"! $79098'

&ecre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71@ :10@?7

71@C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1107?7

I"come T(x P(,(ble555555555555555555555555555555555555   1107?7$:?9908 X ?9=' +(r! $b'

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 10@?7&eferre. T(x Be"efi!55555555555555555555555555555555555   10@?7

olutions Manual 12*% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/18 $Co"!i"-e.'

(c) and (d) continued71

 

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

 

&eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 71 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

Pro+er!,0 +l("! D e-i+me"! :1?0@8 :170 $:1@0?7' ?9= $:<0<9;'

&eferre. !(x li(bili!,0 &ecember ?10 71 $<0<9;'

&eferre. !(x li(bili!, before (.6-s!me"! $770898'

&ecre(se i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71 :107;;

71C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1?708;;

I"come T(x P(,(ble555555555555555555555555555555555555   1?708;;$:?;088 X ?9=' +(r! $b'

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 107;;&eferre. T(x Be"efi!55555555555555555555555555555555555   107;;

olutions Manual 12*( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

EXERCISE 18/18 $Co"!i"-e.'

(c) and (d) continued718

 

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

 

&eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 718 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

Pro+er!,0 +l("!0 D e-i+me"! :@7078 : :@7078 ?9= :7101<1

&eferre. !(x (sse!0 &ecember ?10 718 7101<1

&eferre. !(x li(bili!, before (.6-s!me"! $<0<9;'

I"cre(se i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 718 :7@0

718C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1970?

I"come T(x P(,(ble555555555555555555555555555555555555   1970?$:9180<78 X ?9=' +(r! $b'

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 <0<9;&eferre. T(x Asse!5555555555555555555555555555555555555555555555 7101<1

&eferre. T(x Be"efi!55555555555555555555555555555555555   7@0

*Alternately, a net debit to Deferred Tax Asset/Liability of $26,700 if only one account isused.

olutions Manual 12*$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/18 $Co"!i"-e.'

$e'719C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 11<0@

I"come T(x P(,(ble555555555555555555555555555555555555 

11<0@$:?90 X ?9='

71<C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ;1017

I"come T(x P(,(ble555555555555555555555555555555555555   ;1017$:7@80 X ?9='

71@

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1107?7I"come T(x P(,(ble555555555555555555555555555555555555

 

1107?7$:?9908 X ?9='

71C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1?708;;

I"come T(x P(,(ble555555555555555555555555555555555555   1?708;;$:?;088 X ?9='

718C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1970?

I"come T(x P(,(ble555555555555555555555555555555555555 

1970?$:9180<78 X ?9='

olutions Manual 12*) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

 E<E6CIE 121- $1</7 mi"-!es'

$('

F-!-re Je(rs

71< 71@ To!(l  C-rre

"!No"/

c-rre"!

F-!-re !(x(ble (mo-"!sT(x r(!e&eferre. !(x li(b5

:10@<0  ?=: 9;<0

:10@<0

  7;=: 980<

:?0?0

:;?0<

T*e +rior !(x r(!e of ?= is c(lc-l(!e. b, .i3i.i"# !*e:;;0 b(l("ce of !*e .eferre. !(x li(bili!, (cco-"! (!W("-(r, 10 7190 b, !*e :?0?0 !em+or(r, .iffere"ce (!!*(! s(me .(!e5

O"e/*(lf of !*e i"s!(lme"! recei3(ble is cl(ssifie. (s (c-rre"! (sse! (". o"e/*(lf is "o"/c-rre"!5 T*erefore0 -".er ASPE !*e .eferre. !(x li(bili!, rel(!e. !o !*e +or!io" of !*erecei3(ble comi"# .-e i" 71< is c-rre"! (". !*e .eferre. !(xli(bili!, b(l("ce rel(!e. !o !*e +or!io" of !*e recei3(blecomi"# .-e i" 71@ is "o"/c-rre"!5

$b'

%".er IFRS0 (ll .eferre. !(x b(l("ces (re re+or!e. (s "o"/c-rre"! i" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5T*erefore0 !*e "o"/c-rre"! .eferre. !(x li(bili!, is re+or!e. (s:;?0<5

olutions Manual 12** Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 121- =Continued>

$c'

S!(!eme"! of Fi"("ci(l Posi!io"

$T(x(ble'Tem+or(r,

T(x Deferred Tax

Acco-"! &iffere"ces X R(!e $Li(bili!,'

Recei3(ble $:?0?0' se3er(l $:;?0<'Deferred tax liability, as revised (973,500)Deferred tax liability before rate adjustment (990,000)Decr. in deferred tax liability, and deferredtax benefit for 2014 from tax rate change $16,500

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 1@0<&eferre. T(x Be"efi!5555555555555555555555555555 1@0<

olutions Manual 12*+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12% $7/7< mi"-!es'

$('

F-!-re Je(rs

71< 71@ 71 718 To!(l

F-!-re !(x(ble(mo-"!sE"(c!e. !(x r(!eF-!-re !(x li(bili!,

:@0  ?=:701

:<0  ?=:1<0

:9<0  7<=:1107<

:?;0  7<=: ;0<

:710

: <@01

$b'

S!(!eme"! of Fi"("ci(l Posi!io"

$T(x(ble'

Tem+or(r, T(x Deferred Tax

Acco-"! &iffere"ces X R(!e $Li(bili!,'

Pro+50 +l("!0 D e-i+5 $:710' se3er(l $:<@01'

Deferred tax liability, Dec. 31, 2014 (56,100)Deferred tax liability before adjustment (31,000)Incr. in deferred tax liability, and deferredtax expense for 2014 ($25,100)

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0o"l, !*e "e! .iffere"ce is +ro3i.e.5

&eferre. T(x Ex+e"se555555555555555555555555555555555 7<01&eferre. T(x Li(bili!,55555555555555555555555555 7<01

olutions Manual 12* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

 EXERCISE 18/7 $Co"!i"-e.'

$c'F-!-re Je(rs

71< 71@ 71 718 To!(l

F-!-re !(x(ble(mo-"!s

E"(c!e. !(x r(!eF-!-re !(x li(bili!,

:@0  7;=:1;09?

:<0  7=:1?0<

:9<0  7=:1701<

:?;0  7=:10<?

:710

: <<0@1

S!(!eme"! of Fi"("ci(l Posi!io"

$T(x(ble'Tem+or(r,

T(x Deferred Tax

Acco-"! &iffere"ces X R(!e $Li(bili!,'

Pro+50 +l("!0 D e-i+5 $:710' se3er(l $:<<0@1'

Deferred tax liability, revised balance (55,610)Deferred tax liability before adjustment [part (b)] (56,100)Decr. in deferred tax liability, and deferredtax benefit for 2015 $490

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0

o"l, !*e "e! .iffere"ce is +ro3i.e.5

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 9;&eferre. T(x Be"efi!5555555555555555555555555555 9;

No!e !o I"s!r-c!or) T*e 6o-r"(l e"!r, (bo3e is effec!i3e (".s*o-l. be m(.e (! !*e !ime !*e "e4 r(!es 4ere s-bs!("!i3el,e"(c!e. or0 if fi"("ci(l s!(!eme"!s (re +re+(re. o"l, (""-(ll,0 i!

4o-l. be combi"e. 4i!* o!*er ,e(r/e". (.6-s!me"!s for 71<i"come !(x !*(! recor. !*e i"come !(x ex+e"se5

olutions Manual 12*- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

 E<E6CIE 12%1 $7/7< mi"-!es'

$('711

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555 ?0I"come T(x P(,(ble $:170 X 7<='5 5 ?0

717C-rre"! T(x Ex+e"se55555555555555555555555555555555555555 770<

I"come T(x P(,(ble $:;0 X 7<='5555 770<

71?I"come T(x Recei3(ble55555555555555555555555555555555555 <70<

C-rre"! T(x Be"efi! 555555555555555555555555555 <70<

$7<= X $:170 :;0''

T*is le(3es :780 / :710 :0 of !(x losses (3(il(blefor c(rr,for4(r.5 No e"!r, c(" be m(.e !o recor. (", !(x be"efi!from !*e rem(i"i"# :0 of !(x losses bec(-se i! is "o! moreliQel, !*(" "o! !*(! !*e com+(", 4ill (c!-(ll, be"efi! from !*em5Ho4e3er0 !*e exis!e"ce of !*e :0 loss c(rr,for4(r. s*o-l.be .isclose. i" ( "o!e5

719I" 7190 !*e com+(", e(r"e. :90 of !(x(ble i"come (". i!c(" .e.-c! :90 of !*e :0 !(x loss c(rr,for4(r. from!*is5 T*e, re+or! ( !(x(ble i"come (mo-"! i" 719 of ://5Bec(-se !*e, (re s!ill -"cer!(i" (bo-! bei"# (ble !o be"efi! from!*e rem(i"i"# :?0 of !(x losses i" !*e f-!-re0 "o e"!r, ism(.e !o reco#"ie !*e be"efi! i" !*e ,e(r0 b-! !*is (mo-"! m-s!be .isclose. i" ( "o!e5 I"come !(x ex+e"se i" 719 is ://5

Al!er"(!i3el,0 bo!* ( c-rre"! !(x ex+e"se of :90 X ?= :170 (". ( c-rre"! !(x be"efi! from +re3io-sl, -"reco#"ie.!(x losses (3(il(ble for c(rr,for4(r. of :90 X ?= :170co-l. bo!* be reco#"ie. (". re+or!e.5

olutions Manual 12+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/71 $Co"!i"-e.'

$b'711

I"come $loss' before i"come !(x :170I"come !(x ex+e"se c-rre"! ?0

Ne! i"come :;0

717I"come $loss' before i"come !(x :;0I"come !(x ex+e"se c-rre"! 770<

Ne! i"come :@0<

71?

I"come $loss' before i"come !(x :$780'C-rre"! !(x be"efi! .-e !o loss c(rr,b(cQ <70<

Ne! loss :$770<'

719I"come $loss' before i"come !(x :90C-rre"! !(x ex+e"se //

Ne! i"come :90

Or0 (l!er"(!i3el,)

I"come before i"come !(x :90C-rre"! !(x ex+e"se :170C-rre"! !(x be"efi! from -"reco#"ie.  !(x losses c(rrie. for4(r. $170' //

Ne! i"come :90

olutions Manual 12+1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12%% $1</7 mi"-!es'

711C-rre"! T(x Ex+e"se5555555555555555555555555555555555555555555 7709

I"come T(x P(,(ble $:80 X 78='555555555 7709

717I"come T(x Recei3(ble555555555555555555555555555555555555555 <107 

$:1@0 X ?7='C-rre"! T(x Be"efi! 555555555555555555555555555555555555 <107

71?T*e 71? loss of :?80 is c(rrie. b(cQ :7<0 !o 71 (".

:80 !o 7110 le(3i"# :<0 !o c(rr, for4(r.5

I"come T(x Recei3(ble555555555555555555555555555555555555555 1709C-rre"! T(x Be"efi! 555555555555555555555555555555555555 1709

 

$:7<0 X ?7= :80 X 78='

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 190&eferre. T(x Be"efi!55555555555555555555555555555555555 190

 

$:<0 X 78=' / ://

719C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 7709

I"come T(x P(,(ble 55555555555555555555555555555555555 7709K78= X $:1?0 :<0 loss c(rr,for4(r.'

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 190&eferre. T(x Asse!55555555555555555555555555555555555555 190$: :190'

71<C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 90@I"come T(x P(,(ble $:19<,000 X 28%)555555 90@

olutions Manual 12+% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

 E<E6CIE 12%( $?/?< mi"-!es'

$(' 717C-rre"! T(x Ex+e"se5555555555555555555555555555555555555 908

I"come T(x P(,(ble $:170 X ?9='5 908

71?C-rre"! T(x Ex+e"se5555555555555555555555555555555555555 ?0@

I"come T(x P(,(ble $:;0 X ?9='555 ?0@

719T*e 719 loss of :780 is c(rrie. b(cQ0 :170 !o 717 (".:;0 !o 71?0 le(3i"# :0 !o c(rr,for4(r.5

  I"come T(x Recei3(ble555555555555555555555555555555555 109C-rre"! T(x Be"efi! 5555555555555555555555555555555 109

&eferre. T(x Asse!5555555555555555555555555555555555555555 7@0@&eferre. T(x Be"efi! 55555555555555555555555555555 7@0@

K?9= X :170 K?9= X :;0 :109?8= X $:780 :170 :;0' :7@0@

71<C-rre"! T(x Ex+e"se5555555555555555555555555555555555555 <0

I"come T(x P(,(ble5555555555555555555555555555555 <0K$:770 :0' X ?8=

&eferre. T(x Ex+e"se55555555555555555555555555555555555 7@0@&eferre. T(x Asse!555555555555555555555555555555555 7@0@

$: :7@0@'

olutions Manual 12+( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/7? $Co"!i"-e.'

$b' 719

I"come $loss' before i"come !(x :$780'

I"come !(x be"efi!C-rre"! be"efi! .-e !o loss c(rr,b(cQ :109&eferre. be"efi! .-e !o loss c(rr,for4(r. 7@0@$ ;80

Ne! loss :$1870'

71<

I"come $loss' before i"come !(x :770I"come !(x

C-rre"! !(x ex+e"se :<0

&eferre. !(x ex+e"se 7@0@ 8?0@Ne! i"come :1?@09

$c' 719  I"come T(x Recei3(ble555555555555555555555555555555555 109

C-rre"! T(x Be"efi! 5555555555555555555555555555 109

&eferre. T(x Asse!5555555555555555555555555555555555555555 1;0;<

&eferre. T(x Be"efi! 55555555555555555555555555555 1;0;<

K?9= X :170 K?9= X :;0 :109?8= X $:780 :170 :;0'

:7@0@ X <= :1;0;<

71<C-rre"! T(x Ex+e"se55555555555555555555555555555555555555 <0

I"come T(x P(,(ble55555555555555555555555555555555 <0

K$:770 :0' X ?8=&eferre. T(x Ex+e"se555555555555555555555555555555555555 1;0;<

&eferre. T(x Asse!5555555555555555555555555555555555 1;0;<$: :1;0;<'

 

olutions Manual 12+$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/7? $Co"!i"-e.'

$.' 719

I"come $loss' before i"come !(x :$780'I"come !(x be"efi!C-rre"! be"efi! .-e !o loss c(rr,b(cQ :109&eferre. be"efi! .-e !o loss c(rr,for4(r. 1;0;< ;10?<

 

Ne! loss :$1880@<'

71<

I"come $loss' before i"come !(x :770I"come !(x

C-rre"! !(x ex+e"se :<0&eferre. !(x ex+e"se 1;0;< @0;<

Ne! i"come :19?0<

No!e) For !(x +l(""i"# +-r+oses0 if !*e cor+or(!io" ("!ici+(!es+rofi!(ble ,e(rs (*e(.0 i! m(, "o! c(rr, b(cQ i!s losses i"or.er !o !(Qe (.3("!(#e of !*e *i#*er r(!es for 71< (".be,o".5 T*e loss c(rr,b(cQ is o+!io"(l5

olutions Manual 12+) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12%$ $?/?< mi"-!es'

$(' 719I"come T(x Recei3(ble55555555555555555555555555555555555555555 109

C-rre"! T(x Be"efi! 555555555555555555555555555555555555555 109K?9= X :170 K?9= X :;0 :109

&eferre. T(x Asse!555555555555555555555555555555555555555555555555 7@0@&eferre. T(x Be"efi! 5555555555555555555555555555555555555 7@0@

?8= X $:780 :170 :;0' :7@0@

&eferre. T(x Be"efi!55555555555555555555555555555555555555555555 @0@<Allo4("ce !o Re.-ce &eferre. T(x

Asse! !o Ex+ec!e. Re(li(ble (l-e5555 @0@<

$:7@0@ X 7<='

71<C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555555 <0

I"come T(x P(,(ble555555555555555555555555555555555555555 <0K$:770 :0' X ?8=

&eferre. T(x Ex+e"se5555555555555555555555555555555555555555555 7@0@

&eferre. T(x Asse!5555555555555555555555555555555555555555 7@0@$: :7@0@'

Allo4("ce !o Re.-ce &eferre. T(xAsse! !o Ex+ec!e. Re(li(ble (l-e555555 @0@<

&eferre. T(x Ex+e"se 55555555555555555555555555555555 @0@<

olutions Manual 12+* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/79 $Co"!i"-e.'

$b' 719

O+er(!i"# loss before i"come !(x :$780'I"come !(x be"efi!C-rre"! be"efi! .-e !o loss c(rr,b(cQ :109&eferre. be"efi! .-e !o loss c(rr,for4(r. 1;0;< ;10?<

 

Ne! loss :$1880@<'

71<

O+er(!i"# i"come before i"come !(x :770I"come !(x

C-rre"! !(x ex+e"se :<0&eferre. !(x ex+e"se 1;0;< @0;<

Ne! i"come :19?0<

$c'

C-rre"! (sse!s) 719 71<

 &eferre. T(x Asse! : 7@0@ 2

 Less) Allo4("ce !o Re.-ce &eferre.

T(x Asse! !o Ex+ec!e. Re(li(ble(l-e $@0@<' /

 &eferre. T(x Asse! $"e!' : 1;0;< /

$.' Bo!* !*e &eferre. T(x Asse! (cco-"! (". !*e Allo4("ce !oRe.-ce &eferre. T(x Asse! !o Ex+ec!e. Re(li(ble (l-e(cco-"! s*o-l. be (.6-s!e. for !*e c*("#e i" !*e e"(c!e.!(x r(!es for 71<5 T*is (.6-s!me"! s*o-l. be recor.e. i"

!*e (cco-"!s (s soo" (s i! is Q"o4" (". c(" be me(s-re.5

$e' T*e o"l, .iffere"ce is !*e .eferre. !(x (sse! 4o-l. becl(ssifie. (s ( "o"/c-rre"! (sse! o" !*e s!(!eme"! of fi"("ci(l +osi!io"0 (". ( 3(l-(!io" (llo4("ce m(, "o! be-se.5 I"s!e(.0 !*e &eferre. T(x Asse! (cco-"! 4o-l. be:1;0;<5

olutions Manual 12++ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12%) $7/7< mi"-!es'

$(' C-rre"! T(x Ex+e"se55555555555555555555555555555555555 ?109<I"come T(x P(,(ble55555555555555555555555555555 ?109<

T(x(ble i"come :880E"(c!e. !(x r(!e X ?<=I"come !(x +(,(ble :?109<

 

S!(!eme"! of  Fi"("ci(l Posi!io"

&e.-c!ibleTem+or(r,

T(x Deferred Tax

Acco-"! &iffere"ces X R(!e Asse!(rr("!, Li(bili!ies :?1<0 ?<= :1107<

Deferred tax asset, Dec. 31, 2014 110,250Deferred tax asset before adjustment 101,500Incr. in deferred tax asset, and deferredtax benefit for 2014 $8,750

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0

o"l, !*e "e! .iffere"ce

&eferre. T(x Asse!55555555555555555555555555555555555555 80<&eferre. T(x Be"efi!5555555555555555555555555555 80<

olutions Manual 12+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/7< $Co"!i"-e.'

$b' $15'

  719C-rre"! T(x Ex+e"se55555555555555555555555555555555555 ?109<I"come T(x P(,(ble55555555555555555555555555555 ?109<

S!(!eme"! of Fi"("ci(l Posi!io"

&e.-c!ibleTem+or(r,

T(x

Deferred

Tax

Acco-"! &iffere"ces X R(!e Asse!

(rr("!, Li(bili!ies :?1<0 ?<= :1107<Less (mo-"! "o! liQel, !o be re(lie. $7<0'Deferred tax asset, Dec. 31, 2014 85,250Deferred tax asset before adjustment 101,500Decr. in deferred tax asset and deferred  tax expense for 2014 ($16,250)

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0o"l, !*e "e! .iffere"ce

&eferre. T(x Ex+e"se555555555555555555555555555555555 1@07<&eferre. T(x Asse!555555555555555555555555555555 1@07<

$b' $75'71<

&eferre. T(x Asse!55555555555555555555555555555555555555 7<0&eferre. T(x Be"efi!5555555555555555555555555555 7<0

No!e !o i"s!r-c!or)

T*is e"!r, 4o-l. be combi"e. 4i!* !*e o!*er e"!ries for !*e,e(r !*(! 4o-l. be se!!i"# -+ (", .eferre. !(x (sse! or li(bili!, for c-rre"! ,e(r (c!i3i!,5

olutions Manual 12+- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12%* $7/7< mi"-!es'

$('C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 ?109<

I"come T(x P(,(ble555555555555555555555555555555555555 ?109<

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 80<&eferre. T(x Be"efi! 5555555555555555555555555555555555 80<$:1107< :110<'

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555 7<0Allo4("ce !o Re.-ce &eferre. T(x

Asse! !o Ex+ec!e. Re(li(ble (l-e555555 7<0

$b'Allo4("ce !o Re.-ce &eferre. T(x

Asse! !o Ex+ec!e. Re(li(ble (l-e555555555555555 7<0&eferre. T(x Be"efi!55555555555555555555555555555555555 7<0

olutions Manual 12 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12%+ $1/1< mi"-!es'

(a) Related (b)Resulting Stmt of (ASPE)

Temporary Deferred Tax Fin Pos Classi-Difference Asset Liability Account fication

&e+rec5 $:7?0' Pl("! Asse!s No"c-rre"!

Li!i#(!io"Loss :80

L(4s-i!Obli#(!io" C-rre"!

I"s!(lme"! I"s!(lme"!S(le   $77<0' Recei3(ble No"c-rre"!

To!(ls :80 $:9<<0'

Lo"#/!erm li(bili!ies  &eferre. !(x li(bili!, : ?<0  $:9<<0 :80'

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

$b'C-rre"! (sse!s

&eferre. !(x (sse! : 80 

Lo"#/!erm li(bili!ies&eferre. !(x li(bili!, 9<<0

Under ASPE, deferred tax assets and deferred tax liabilities aresegregated into current and non-current categories. The

classification of an individual deferred tax liability or asset ascurrent or non-current is determined by the classification of theasset or liability underlying the specific temporary difference.

olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12% $7</? mi"-!es'

$('C(lc-l(!io" of c-rre"! i"come !(x ex+e"se)

I"comefrom

Co"!i"-i"#O+er(!io"s

&isco"/!i"-e.

O+er(!io"s To!(lAcco-"!i"# i"come)  Re3e"-e :7?0 :1180  Ex+e"ses 71@0 110<

<0 0< :@90<

Perm("e"! .iffere"ces)  No"/!(x(ble .i3i.e".s  Golf cl-b .-es

$10'90<

$10'90<

Re3ersi"# .iffere"ces)  CCA .e+reci(!io" $?0' $?0'  Li!i#(!io" loss <01 <01

T(x(ble i"come :<@01 :170@ :@80C-rre"! i"come !(xes

for 719 ?<= :1;0@?< :9091 :7909<

C(lc-l(!io" of .eferre. !(x ex+e"se0 co"!i"-i"# o+er(!io"s)S!(!eme"! of $T(x(ble'

Fi"("ci(l Posi!io" Tem+or(r, T(x Deferred Tax

Acco-"! &iffere"ces X R(!e $Li(bili!,'

PPDE $:?0' ?<= $:107;<'Deferred tax liability, Dec. 31, 2014 (1,295)Deferred tax liability before adjustment 0

Incr. in deferred tax liability, and deferred tax expensefor 2014 for continuing operations ($1,295)

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0o"l, !*e "e! .iffere"ce is +ro3i.e.5

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/78 $Co"!i"-e.'

C(lc-l(!io" of .eferre. !(x ex+e"se0 .isco"!i"-e. o+er(!io"s)

S!(!eme"! of &e.-c!ibleFi"("ci(l Posi!io" Tem+or(r, T(x Deferred Tax

Acco-"! &iffere"ces X R(!e Asse!

Li!i#(!io" Li(bili!, :<01 ?<= :108<Deferred tax asset, Dec. 31, 2014 1,785Deferred tax asset before adjustment 0Incr. in deferred tax asset, and deferred tax benefitfor 2014 – for Disc. Operations $1,785

C(rr,i"# (mo-"! (". !(x b(se (re "o! #i3e" i" !*e exercise0o"l, !*e "e! .iffere"ce is +ro3i.e.5

$b' C-rre"! T(x Ex+e"se55555555555555555555555555555555 1;0@?<C-rre"! T(x Ex+e"se

&isco"!i"-e. O+er(!io"s555555555555555555555 9091I"come T(x P(,(ble55555555555555555555555555 7909<

&eferre. T(x Ex+e"se5555555555555555555555555555555 107;<&eferre. T(x Li(bili!,555555555555555555555555 107;<

&eferre. T(x Asse!555555555555555555555555555555555555 108<&eferre. T(x Be"efi!   &isco"!i"-e. O+er(!io"s55555555555555 108<

 

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/78 $Co"!i"-e.'

$c'I"come before i"come !(x (".

.isco"!i"-e. o+er(!io"s : <0

I"come !(x

  C-rre"! !(x : 1;0@?<&eferre. !(x 107;< 70;?

I"come from co"!i"-i"# o+er(!io"s ?@0

I"come from .isco"!i"-i"# o+er(!io"s 0<

Ne! of (++lic(ble i"come !(x)

 C-rre"! !(x :9091

 &eferre. !(x $108<' 70@7< 908<

Ne! I"come :90;9<

E(r"i"#s +er s*(re)

I"come from co"!i"-i"# o+er(!io"s :?5@

I"come from .isco"!i"-i"# o+er(!io"s 59;

Ne! I"come  :95;

$.'No"/c-rre"! (sse!s

&eferre. !(x (sse! $:108< :107;<' :9; 

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

EXERCISE 18/78 $Co"!i"-e.'

$e'C-rre"! (sse!s

&eferre. !(x (sse! :108<Non-current liabilities

  Deferred tax liability 1,295

Under ASPE, deferred tax assets and deferred tax liabilities aresegregated into current and non-current categories. Theclassification of an individual deferred tax liability or asset ascurrent or non-current is determined by the classification of theasset or liability underlying the specific temporary difference.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12%- $1</7 mi"-!es'

$(' C-rre"! T(x Ex+e"se55555555555555555555555555555555555 8;09<I"come T(x P(,(ble55555555555555555555555555555 8;09<

$b' I"come before i"come !(x :?70I"come !(x ex+e"se 8;09<Ne! i"come :7170<7<

$c' C-rre"! li(bili!ies)

I"come !(x +(,(ble :8;09<

$.'

A..i!io"(l .isclos-res 4o-l. i"cl-.e ( s!(!eme"! !*(! !*e!(xes +(,(ble me!*o. is bei"# -se. (". ( brief .escri+!io"of 4*(! i! e"!(ils0 (lo"# 4i!*)

15 i"come !(x ex+e"se or be"efi! i"cl-.e. i" .e!ermi"i"#i"come $loss' before .isco"!i"-e. o+er(!io"s (". !*e(mo-"! rel(!e. !o !r("s(c!io"s reco#"ie. i" e-i!,

75 ( reco"cili(!io" of !*e (c!-(l !(x r(!e or ex+e"se or be"efi!!o !*e s!(!-!or, (mo-"! for i"come $loss' before

.isco"!i"-e. o+er(!io"s0 4i!* i"form(!io" (bo-! m(6or reco"cili"# i!ems

?5 !*e (mo-"! of reser3es !o be i"cl-.e. i" !(x(ble i"come i"e(c* of !*e "ex! fi3e ,e(rs (". !*e (mo-"! of -"-se.i"come !(x cre.i!s (". losses c(rrie. for4(r.5

$e' R(m(" is +ro3i.i"# (ll of !*e "ecess(r, (". rele3("!.isclos-re (s me"!io"e. i" $.' (bo3e5 Cre.i!ors c("!*erefore i"!er+re! !*e effec! of (.o+!i"# !*e !(xes +(,(bleor .iffere"!i(l me!*o. of (cco-"!i"# for !*e i"come !(x

(cco-"!s5 Cre.i!ors 4ill (lso -".ers!(". R(m("smo!i3(!io" i" (.o+!i"# !*is me!*o.5 T*e be"efi!s of !*e(l!er"(!i3e me!*o. (re liQel, excee.e. b, -""ecess(r, (".+ossibl, excessi3e cos!s of +ro3i.i"# !*e (..i!io"(li"form(!io"5

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12( $1/1< mi"-!es'

$('Acco-"!i"# i"come :1<0Perm("e"! .iffere"ces)

No"/.e.-c!ible fi"es 1<0170

Re3ersi"# .iffere"ces)Excess of CCA o3er .e+reci(!io"  $1@0'Excess re"! collec!e. o3er re"! e(r"e. 790

T(x(ble i"come :1780C-rre"! i"come !(xes ?= :?809

$b' C-rre"! T(x Ex+e"se555555555555555555555555555555555555555 ?809I"come T(x P(,(ble555555555555555555555555555555555 ?809

$c' I"come before i"come !(x :1<0I"come !(x ex+e"se ?809Ne! i"come :@@0@

$.' C-rre"! (sse!s

I"come !(x recei3(ble :?0@($42,000 – $38,400)

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

E<E6CIE 12(1 $1</7 mi"-!es'

$('

Acco-"!i"# i"come before (.6-s!me"!s :18<0A..) <= me(ls (". e"!er!(i"me"! 10Less) CCA i" excess of .e+reci(!io" $7<0'T(x(ble i"come :10

I"come !(x ex+e"se 78= :90@

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555 90@

I"come T(x P(,(ble555555555555555555555555555555555 90@

$b'

Effec!i3e T(x R(!e :90@>:18<0 7<5=A.6-s!me"! for +erm("e"! .iffere"ces $:10 x 78='>:18<0 $15<='

A.6-s!me"! for re3ersi"# .iffere"ces $:7<0 x 78='>:18<0 ?58=S!(!-!or, T(x R(!e 785=

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

TIME AN& P%RPOSE OF PROBLEMS

4ro!lem 121 =Time (2() minutes>

4ur"ose?to test a student@s a!ility to differentiate !et'een "ermanent and

tem"orary differences, calculate and classify and record current and deferredtaes as 'ell as "re"are a "artial income statement and statement of financial"osition. The student in this case is dealing 'ith a single ta rate and o"ening!alances to the deferred ta accounts related to a single tem"orary difference.

4ro!lem 12% =Time $)2) minutes>

4ur"ose?to test a student@s a!ility to calculate and classify deferred taes for fi#etem"orary differences, 'hile dealing 'ith an o"ening !alance in the deferred taasset account. tudent must deal 'ith three years and t'o ta rates and isre;uired to draft the income statement for the year as 'ell as arri#e at statementof financial "osition amounts 'ith a""ro"riate classifications.

Problem 18-3 (Time 50-60 minutes)

4ur"ose?to "ro#ide the student 'ith an understanding of ho' to calculate and"ro"erly classify deferred taes 'hen there are four ty"es of tem"orarydifferences. A single ta rate a""lies. The student is re;uired to calculate andclassify deferred taes. Also, the student must use data gi#en to sol#e for !othtaa!le income and "re2ta accounting income. 6econciliations of re#ersingdifferences and the resulting deferred ta accounts must !e "re"ared in order to"ro#ide "ro"er com"arati#e statement of financial "osition disclosures. 5inally thereconciliation of the effecti#e ta rate is re;uired.

4ro!lem 12$  =Time )2* minutes>

4ur"ose?to "ro#ide the student 'ith a situation 'here =1> a tem"orary differenceoriginates o#er a three2year "eriod and !egins to re#erse in the fourth "eriod, =%>a change in an enacted ta rate occurs first in a year "rior to the year in 'hich theamount of the cumulati#e tem"orary difference originates and then second in ayear in 'hich there is a change in the amount of cumulati#e tem"orary difference,=(> the amount of originating or re#ersing tem"orary difference must !e calculatedeach year in order to determine the cumulati#e tem"orary difference at the end of each year, and =$> there is a "ermanent difference along 'ith a tem"orarydifference each year. :ournal entries are re;uired for the first year in one instance

and then for each of four years, including the entry for the ad8ustment of deferredtaes due to the change in the enacted ta rate. The income statement disclosureis also re;uired for one year.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

TIME AN& P%RPOSE OF PROBLEMS $CONTIN%E&'

Problem 18-5 (Time 40-45 minutes)

4ur"ose?to "ro#ide the student 'ith an understanding of ho' future tem"orary

differences for eisting de"recia!le assets are considered in determining thefuture years in 'hich eisting tem"orary differences result in taa!le or deducti!leamounts. The student is gi#en information a!out "re2ta accounting income, onetem"orary difference, and one "ermanent difference. The student must calculateall amounts related to income taes for the current year and "re"are the 8ournalentry to record them. In order to determine the !eginning !alance in a deferred taaccount, the student must calculate deferred taes for the "rior year@s statementof financial "osition. An income statement and statement of financial "osition"resentation is also re;uired along 'ith earnings "er share disclosure.

Problem 18-6 (Time 50-60 minutes)

Purpose—to provide the student with the opportunity to reconcile timing

differences reversing over a two-year period stemming from several sources, but

using a consistent tax rate. Discontinued operations are also dealt with in this

problem. The production of entries, income statement and statement of financial

position amounts are also a requirement in this challenging problem.

4ro!lem 12+ =Time $2$) minutes>

4ur"ose?to de#elo" an understanding of the conce"t of future taa!le amountsand future deducti!le amounts. Also, to de#elo" an understanding of ho're#ersing timing differences affect the calculation of deferred ta assets andlia!ilities 'hen there are multi"le ta rates enacted for the #arious "eriodsaffected !y eisting tem"orary differences. &ifferent assum"tions as to thelikeliness of reali9ation of deferred ta assets accrued from future deducti!leamounts are used and lead to a #ariety of entries and financial statement!alances to !e re"orted for t'o years.

4ro!lem 12 =Time )2* minutes>

4ur"ose?to "ro#ide the student 'ith the o""ortunity to deal 'ith se#eral

re#ersing differences re#ersing o#er a t'o2year "eriod 'ith se#eral ta ratesin#ol#ed. The acti#ity of some statement of financial "osition accounts o#er thet'o year "eriod "ro#ide the necessary detail to trace the re#ersing timingdifferences. 6e"orting of com"arati#e !alances on the statement of income andstatement of financial "osition at the end each of the t'o years must also !e"ro#ided. A good understanding of the accounting and ta treatment is re;uired tohandle this challenging "ro!lem.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

TIME AN& P%RPOSE OF PROBLEMS $CONTIN%E&'

4ro!lem 12- =Time %)2( minutes>

4ur"ose?to "ro#ide the student 'ith an understanding of ho' the calculation and

classification of deferred taes are affected !y the indi#idual future year=s> in'hich future taa!le and deducti!le amounts are scheduled to occur !ecause of eisting tem"orary differences. T'o situations are gi#en and the student isre;uired to calculate, record and classify the deferred taes for each. A netdeferred ta asset results in !oth cases.

4ro!lem 121 =Time $2) minutes>

4ur"ose?to test a student@s understanding of the relationshi"s that eist in thesu!8ect area of accounting for income taes. The student is re;uired to calculateand classify deferred taes for t'o successi#e years. The 8ournal entry to recordincome taes is also re;uired for each year. A draft of the income ta e"ense

section of the income statement is also re;uired for each year. An interesting t'istto this "ro!lem is that the student must calculate taa!le income for t'o indi#idual"eriods !ased on facts a!out the ta rate and amount of taes "aid for each"eriod and then com!ine that information 'ith data on tem"orary differences tocalculate "re2ta accounting income.

4ro!lem 1211 =Time )2* minutes>

4ur"ose?to test a student@s a!ility to calculate, record and classify deferred taesfor three re#ersing differences and three "ermanent differences and to draft theincome statement and a statement of retained earnings for the year. This "ro!lemalso re;uires the reconciliation of the effecti#e ta rate.

4ro!lem 121% =Time ()2$ minutes>

4ur"ose?to "ro#ide the student 'ith a situation in#ol#ing an actual net o"eratingloss 'hich can !e "artially offset !y "rior taes "aid using the carry!ack "ro#ision.:ournal entries for the loss year and t'o su!se;uent years are re;uired. The!enefits of the loss carryfor'ard are reali9ed in the year follo'ing the loss year inone case and une"ected in another. Income statement "resentations arere;uired for the loss year 'here the !enefits of the carry!ack and the carryfor'ardare recogni9ed and the year follo'ing the loss year 'here the !enefits of thecarryfor'ard are reali9ed and for the case 'here the loss carryfor'ard is not

e"ected.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

TIME AN& P%RPOSE OF PROBLEMS $CONTIN%E&'

4ro!lem 121( =Time ()2$ minutes>

4ur"ose?To challenge the student to deal 'ith an error in a "rior "eriod in acom"any follo'ing A4E and using the future/deferred income taes method of accounting. The "ro!lem also includes re#ersing =CCA #s de"reciation andallo'ance for dou!tful accounts> and "ermanent differences =income ta "enaltiesand interest, and golf clu! dues>. The student must consider refiling the "rior year ta return as a result of the error and com"lete the statement of retained earnings'ith the after ta im"act of the error sho'n. The student must also "re"are the

 8ournal entry for the error.

4ro!lem 121$ =Time )2* minutes>

4ur"ose?To introduce the student to accounting for commercial real estate

leases and deal 'ith the re#ersing differences ="re"aid rent and rent "aya!le> as'ell as "ermanent differences =golf clu! dues and interest e"ense incurred toearn income not su!8ect to ta>. The student must deal 'ith % years of information,calculate income ta e"ense and "aya!le for % years and 8ournali9e all taentries for % years. Also re;uired is ta section of income statement andcom"arati#e statements of financial "osition for % years. The ;uestion em"hasi9esthe fe' differences !et'een the deferred a""roach to income taes under !oth

 A4E and I56.

4ro!lem 121) =Time *2+) minutes>

4ur"ose?To "ro#ide the students 'ith a challenging "ro!lem that re;uires themto think through a num!er of issues loss carry!ack in a situation 'here thecom"any@s accounting income and taa!le income has differences due to timingand "ermanent differences, a change in ta rate, and a loss carryfor'ard thatcannot !e recogni9ed in its entirety. tudents are asked to "re"are entries and theincome ta rate reconciliation note.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

SOL%TIONS TO PROBLEMS

PROBLEM 18-1

$('

S!(!eme"! of  

&e.-c!ible T(x  &eferre.  $ASPE'Fi"("ci(l Posi!io" $T(x(ble' R(!e T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, $see Asse! or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces belo4' $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+5 :;0 :;?@0 $:?@0' ?= $:108' LT

Pre+(i. re"! $71< ex+e"se' // 7<0 $7<0' ?= $0<' C

Pre+(i. re"! $71@ ex+e"se' // 7<0 $7<0' ?= $0<' LT(rr("!, li(bili!, // $@0' @0 ?= 108 C

&eferre. !(x li(bili!,0 &ecember ?10 719 $790'&eferre. !(x li(bili!, before (.6-s!me"! $@0'

I"cr5 i" &eferre. !(x li(bili!,0 (". &eferre. !(x ex+e"se for 719 $:180'

:1070 :10 :70 :;0 :1070 $:1070 X 7= X <=' :71@0 :8@90

Taxable temporary difference, Dec. 31, 2013 X tax rate = Deferred tax liability, Dec. 31, 2013($1,100,000  :1080' X tax rate = $6,000Tax rate = 30%

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/1 $Co"!i"-e.'

$b'Acco-"!i"# i"come :80Perm("e"! .iffere"ces)

<= of me(ls ex+e"se $:1@0 X <=' :80Golf cl-b fees 170 70

10Re3ersi"# .iffere"ces)

&e+reci(!io" 70C(+i!(l cos! (llo4("ce $71@0'   $1@0'Re"! +(i. $<0'Re"! ex+e"se 7<0 $<0'

(rr("!, ex+e"se 170(rr("!, +(,me"!s $@0' @0T(x(ble i"come :90C-rre"! i"come !(xes ?= :170

$c' C-rre"! T(x Ex+e"se555555555555555555555555555555555 170I"come T(x P(,(ble55555555555555555555555555 170

&eferre. T(x Ex+e"se5555555555555555555555555555555 180

&eferre. T(x Li(bili!,555555555555555555555555 180$.'

I"come before i"come !(x :80I"come !(x

C-rre"! :170&eferre. 180 ?0

Ne! i"come :<0

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/1 $Co"!i"-e.'

$e'S!(!eme"! of fi"("ci(l +osi!io"0 &ecember ?10 719

C-rre"! li(bili!ies)&eferre. !(x li(bili!,) $:0< :108' :<0

No"/c-rre"! li(bili!ies)&eferre. !(x li(bili!, $:0< :108' 180?

Under ASPE, deferred tax assets and deferred tax liabilities are

segregated into current and non-current categories. The

classification of an individual deferred tax liability or asset as

current or non-current is determined by the classification of theasset or liability underlying the specific temporary difference.

$f'If A"!*o", re+or!e. -".er IFRS0 !*e o"l, .iffere"ce 4o-l. be i"*o4 (", .eferre. !(x (sse! or li(bili!, 4o-l. be re+or!e. o" !*es!(!eme"! of fi"("ci(l +osi!io"5

S!(!eme"! of fi"("ci(l +osi!io"0 &ecember ?10 719No"/c-rre"! li(bili!ies)&eferre. !(x li(bili!, $:180? :<0' :790

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-2

$('

For "o"/c-rre"! .eferre. !(xes)

&eferre. T(x Asse! $Li(bili!,'

F-!-re !(x(ble (mo-"!s) LT 71< 71@ 71 To!(l

CCA 3s5 .e+reci(!io" $:;0' $:<0' $:90' $:180'

T(x r(!e e"(c!e. for !*e ,e(r ?= 78= 78=

&eferre. !(x li(bili!, $:70' $:190' $:1107' $:<707'

F-!-re !(x(ble (mo-"!s) LT 71< 71@ 71 To!(l

I"s!(lme"! (cco-"!s recei3(ble $:?@0' $:?@0' $:70'

T(x r(!e e"(c!e. for !*e ,e(r 78= 78=

&eferre. !(x li(bili!, $:108' $:108' $:701@'

F-!-re .e.-c!ible (mo-"!s) LT 71< 71@ 71 To!(l

Pe"sio" li(bili!, : ?0 : 70 : 10 : @0T(x r(!e e"(c!e. for !*e ,e(r ?= 78= 78=

&eferre. !(x (sse! : ;0 : <0@ : 708 : 109

&eferre. !(x li(bili!, "o"/c-rre"! $:180' $:18098' $:18098' $:<90;@'

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/7 $Co"!i"-e.'

$(' $co"!i"-e.'

For Yc-rre"! .eferre. !(xes) &eferre. !(x (sse!  (liability)___

F-!-re .e.-c!ible (mo-"!s) C 71<%"e(r"e. ro,(l!ies : @0

T(x r(!e e"(c!e. for !*e ,e(r ?=

&eferre. !(x (sse! : 7708

F-!-re .e.-c!ible (mo-"!s) C 71<

(rio-s (ccr-e. ex+e"ses : 790

T(x r(!e e"(c!e. for !*e ,e(r ?=

&eferre. !(x (sse! : 07

F-!-re !(x(ble (mo-"!s) C 71<

I"s!(lme"! (cco-"!s recei3(ble : $?@0'T(x r(!e e"(c!e. for !*e ,e(r ?=

&eferre. !(x li(bili!, : $108'

&eferre. !(x (sse! c-rre"! : 1;07

olutions Manual 12-+ Cha"ter 1

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PROBLEM 18/7 $Co"!i"-e.'$(' $co"!i"-e.'

S!(!eme"! of $T(x(ble' &eferre. $ASPE'

Fi"("ci(l Posi!io" &e.-c!ible T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

PPDE $!(ble (bo3e' $:180' Mixe. $:<707' LTI"s!(l5 (cco-"!s recei3(ble // :70 $70' Mixe. $701@' LT

Pe"sio" li(bili!, // $:@0' @0 Mixe. 109 LT

%"e(r"e. ro,(l!ies // $:@0' @0 ?= 7708 C

Accr-e. li(bili!ies // $:790' 790 ?= 07 C

I"s!(l5 (cco-"!s recei3(ble // :?@0 $?@0' ?= $108' C

&eferre. !(x li(bili!,0 &ecember ?10 719 $?<0@'&eferre. !(x (sse! before (.6-s!me"! ?0

I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719 $:@<0@'

Amo-"!s "o! #i3e" i" !*e +roblem&eferre. T(x Ex+e"se555555555555555555555555555555555 @<0@

&eferre. T(x Li(bili!,55555555555555555555555555 @<0@S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io") Refer !o l(s! !4o col-m"s i" !(bles (bo3e(". s-mm(ries5

719C-rre"! (sse!s

&eferre. !(x (sse! :1;07Long-term liabilities

&eferre. !(x li(bili!, :<90;@

olutions Manual 12- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/7 $Co"!i"-e.'

$b'719

No"/c-rre"! li(bili!ies)&eferre. !(x li(bili!, $:<90;@ :1;07' :?<0@

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

$c' :180 !(x .-e for 719 Z ?= 719 !(x r(!e :@0!(x(ble i"come for 7195

$.' Acco-"!i"# i"come for 719)Ass-mi"# !*(! !*e o"l, .iffere"ces be!4ee" (cco-"!i"#i"come (". !(x(ble i"come rel(!e !o !*e re3ersi"#.iffere"ces #i3e"0 !*e 719 re3ersi"# .iffere"ces (re)

CCA .e+reci(!io" $:;0 :<0 :90' $:180'

I"s!(lme"! #ross +rofi! !(x(ble (mo-"!)  $:?@0 :?@0 :?@0' $180'

Pe"sio" ex+e"se U +e"sio" co"!rib-!io"s0 719)  Acc-m-l(!e. !o &ec5 ?10 719

$:?0 :70 :10' :@0Less (cc-m-l(!e. !o W("5 10 719 $10'  Re3ersi"# .iffere"ce i" ,e(r) $90'

Royalties received > royalty revenues 76,000

Ex+e"ses i"c-rre. ex+e"ses +(i. 790

To!(l re3ersi"# .iffere"ces0 719

  $:7780

'

Tem+or(r, .e.-c!ible .iffere"ce (cc-m-l(!e. !o W("-(r, 10719) :?0 .eferre. !(x (sse! Z ?= !(x r(!e :10

olutions Manual 12-- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/7 $Co"!i"-e.'

$.' $Co"!i"-e.'

C(lc-l(!io" of (cco-"!i"# i"come0 719) Acco-"!i"# i"come : XRe3ersi"# .iffere"ces $7780'T(x(ble i"come see +(r! $c' : @0

T*erefore0 (cco-"!i"# i"come)  :@0 :7780 : 8780

I"come before i"come !(x :8780I"come !(x ex+e"se

C-rre"! :180&eferre.

 

@<0@ 79<0@Ne! i"come :<87079

*This can be further divided into the deferred taxes caused bya change in the rate of tax, and those caused by changes inthe temporary differences themselves:

Caused by change in rate of tax:Deferred tax asset, January 1, 2014

$100,000 @ 30% $30,000Deferred tax asset, January 1, 2014

$100,000 @ 30% for 2014, 2015, and28% for 2016, 2017:$40,000 @ 30% $12,000$30,000 @ 30% 9,000$20,000 @ 28% 5,600

$10,000 @ 28% 2,800 29,400$ 600

Caused by changes in temporary differences:$65,760  :@ :@<01@

olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-3

$('

Excess CCA o3er &e+rec5 71< 71@ 71 718 To!(l

F-!-re !(x(ble (mo-"!s : ?0< : ?0< : ?0< : ?0< : 1<0T(x r(!e e"(c!e. for !*e ,e(r 7<= 7<= 7<= 7<=

&eferre. !(x li(bili!, : ;0?< : ;0?< : ;0?< : ;0?< : ?0<

%"e(r"e. Re"! 719 71< 71@ To!(l

F-!-re .e.-c!ible (mo-"!s :70 :70 :70 :@0

T(x r(!e e"(c!e. for !*e ,e(r ?= 7<= 7<=

&eferre. !(x (sse! :@0 : <0 :<0 :1@0

olutions Manual 1211 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-3 (Continued)

For $#S!(!eme"! of 

Fi"("ci(l Posi!io"&e.-c!ible$T(x(ble' &eferre.

T(x

$ASPEC-rre"

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#

&ec5 ?10 71? B(se Amo-"! &iffere"ces R(!e $Li(bili!,' TermPPDE $!(ble (bo3e' $:1<0' 7<= $:?0<' LT%"e(r"e. Re"! $!(ble(bo3e'

// $:70' 70 ?= @0 C

%"e(r"e. Re"! $!(ble(bo3e'

// $:90' 90 7<= 10 LT

&eferre. !(x li(bili!,0 &ecember ?10 71? $:710<'

Amo-"!s "o! #i3e" i" !*e +roblem

olutions Manual 121% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/? $Co"!i"-e.'

$b'C(lc-l(!io" of effec! of .is+os(l of e-i+me"! o" !em+or(r, .iffere"ces)

Ori#i"(l cos! of .is+ose. e-i+me"! : 1<0

Acc-m-l(!e. &e+reci(!io" of .is+ose. e-i+me"! $?0'

Re.-c!io" i" c(rr,i"# (mo-"! of e-i+me"! @80Re.-c!io" i" CCA +ool $%CC' for +rocee.s ;0

Re3ersi"# .iffere"ce i" 719 770 :770

CCA .e+reci(!io"0 719 10

Excess of c(rr,i"# (mo-"! o3er !(x b(se0 W("-(r, 10 719 1<0

Excess of c(rr,i"# (mo-"! o3er !(x b(se0 &ec5?10 719 :770

C(rr,i"# (mo-"! !(x b(se0e-i+me"! 71< 71@ 71 718 To!(l

 F-!-re !(x(ble (mo-"!s : @80 : @80 : @80 : @80 : 770

T(x r(!e e"(c!e. for !*e ,e(r 7<= 7<= 7<= 7<=

 &eferre. !(x li(bili!, : 10 : 10 : 10 : 10 : @80

%"e(r"e. Re"! 71< 71@ To!(l

F-!-re .e.-c!ible (mo-"!s :70 : 70 :90

T(x r(!e e"(c!e. for !*e ,e(r 7<= 7<=

&eferre. !(x (sse! :<0 : <0 :10

olutions Manual 121( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/? $Co"!i"-e.'

$b' $Co"!i"-e.'

  For $#'

S!(!eme"! of Fi"("ci(l Posi!io"

$T(x(ble'&e.-c!ible

&eferre.T(x

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

PPDE $!(ble (bo3e' $:770' 7<= $:@80' LT

%"e(r"e. Re"! $!(ble (bo3e' // $:70' 70 7<= <0 C

%"e(r"e. Re"! $!(ble (bo3e' // $:70' 70 7<= <0 LT

LT I"3es!me"! <0 7<= 180< LT

&eferre. !(x li(bili!,0 &ecember ?10 719 $?;07<'&eferre. !(x li(bili!, before (.6-s!me"! $710<'

I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719 $:10<'

Amo-"!s "o! #i3e" i" !*e +roblem

$c' &eferre. T(x Ex+e"se555555555555555555555555555555555 10<&eferre. T(x Asse!55555555555555555555555555555555555555 170< 

$:180< :<0 :<0 o+5 b(l5 :1@0'&eferre. T(x Li(bili!,55555555555555555555555555 ?0<  $:@80 o+5 b(l5 :?0<'

Al!er"(!el, "e! !*e !4o&eferre. T(x Asse!>Li(bili!,5555555555555555 10<

olutions Manual 121$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/? $Co"!i"-e.'

$c' $co"!i"-e.'

Acco-"!i"# i"come :@??0

Perm("e"! .iffere"ces)

 &i3i.e".s recei3e. !*(! (re "o! !(x(ble $:1<0'

L(!e i"!eres! +e"(l!ies o" !(x i"s!(lme"!s 7088 $17017'@7088

Re3ersi"# .iffere"ces)

G(i" o" .is+os(l of e-i+me"! $770'

Im+(irme"! loss o" i"3es!me"!s <0  Excess of re"! re3e"-e o3er c(s* recei3e.

$:@0 :90' $70'

  CCA &e+reci(!io" $10'

T(x(ble i"come :<<?088

C-rre"! i"come !(xes (! ?= c-rre"! r(!e :1@@01@9

C-rre"! T(x Ex+e"se55555555555555555555555555555555555 1@@01@9I"come T(x P(,(ble55555555555555555555555555555 1@@01@9

olutions Manual 121) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/? $Co"!i"-e.'

$.'S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io")

719 71?Long-term liabilities

Deferred tax liability 39,250 21,500

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

 $e'

I"come s!(!eme"! +rese"!(!io")

I"come before i"come !(x :@??0I"come !(x

  C-rre"! !(x : 1@@01@9

&eferre. !(x 10< 18?0;19

Ne! i"come :99;08@

$f' Z Acco-"!/

?= i"# I"come

Acco-"!i"# i"come :@??0 :18;0; ?5=

No"/!(x(ble .i3i.e".s $1<0' $90<' $5'=

No"/.e.-c!ible +e"(l!ies 7088 8@9 51=

  :18@07@9 7;59=Ne! !(x(ble !em+or(r, .iffere"ces

!(xe. (! lo4er 7<= r(!e)

$:770 :1<0' X <= $:@01'

 :<0 X <= ?0< $70?<' $59'=

:18?0;19 7;5=

Effec!i3e !(x r(!e $:18?0;19 > :@??0' 7;5=

T*e effec!i3e !(x r(!e .iffers from !*e s!(!-!or, r(!e bec(-se!*ere is "o !(x effec! o" !*e +erm("e"! .iffere"ces0 (". bec(-seof !*e .eferme"! of !(xes !o !*e f-!-re (! ( 7<= r(!e r(!*er !*("!*e c-rre"! r(!e of ?=5PROBLEM 18/? $Co"!i"-e.'

olutions Manual 121* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

$#'

A com+(", re+or!i"# -".er ASPE m(, -se .iffere"! !ermi"olo#,0b-! "o"e of !*e c(lc-l(!io"s 4o-l. .iffer exce+! for !*e

cl(ssific(!io" of !*e .eferre. !(x (sse!s (". li(bili!ies i" !*es!(!eme"! of fi"("ci(l +osi!io"0 (s ex+l(i"e. belo45

S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io") $see !(bles i" $('(". $b''

719 71?C-rre"! (sse!s

&eferre. !(x (sse! :<0 :@0Long-term liabilities

Deferred tax liability 44,250 27,500

Under ASPE, deferred tax assets and deferred tax liabilities are

segregated into current and non-current categories. The

classification of an individual deferred tax liability or asset as

current or non-current is determined by the classification of the

asset or liability underlying the specific temporary difference.

olutions Manual 121+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-4

(a) Before .eferre. !(xes c(" be c(lc-l(!e.0 !*e (mo-"! of !*e re3ersi"# .iffere"ces

ori#i"(!i"# $re3ersi"#' e(c* +erio. (". !*e res-l!i"# !em+or(r, .iffere"ce (! e(c*,e(r/e". m-s! be c(lc-l(!e.)

719 71< 71@ 71

Acco-"!i"# i"come : 9@0 : 970 : ?;0 : 9@0

Perm("e"! .iffere"ce 90 90 90 90

<0 9@0 9?0 <0

T(x(ble i"come $#i3e"' 7;;0 7;90 ?907 @990

Re3ersi"# .iffere"ce for !*e ,e(r $:710' $:1@@0' $:17<08' :1990

T(x r(!e e"(c!e. for !*e ,e(r 7<= ?= ?= ?=

C-rre"! i"come !(x $= X !(x(blei"come' :90< :8807 :;107@ :1;?07

$T(x(ble' !em+or(r,

&iffere"ce be#i""i"# of ,e(r  $: ' $:710' $:?@0' $:9;708'$Excess' CCA i" ,e(r  $710' $1@@0' $17<08' 1990

$T(x(ble' !em+or(r,  &iffere"ce e". of ,e(r 

  $:710' $:?@0' $:9;708' $:?9808'

olutions Manual 121 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/9 $Co"!i"-e.'

$(' (". $b'719

S!(!eme"! of Fi"("ci(lPosi!io" $T(x(ble' &eferre.

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x T(x or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+5 $:710' 7<= $:<07<' LT

&eferre. !(x li(bili!,0 &ecember ?10 719 $<07<'&eferre. !(x li(bili!, before (.6-s!me"!

I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719 $:<07<'

Amo-"!s "o! #i3e" i" !*e +roblem

719C-rre"! T(x Ex+e"se55555555555555555555555555555555555 90<

I"come T(x P(,(ble55555555555555555555555555555 90<

K$refer !o !(ble i" +(r! $('

&eferre. T(x Ex+e"se555555555555555555555555555555555 <07<&eferre. T(x Li(bili!,55555555555555555555555555 <07<

olutions Manual 121- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/9 $Co"!i"-e.'

$(' (". $b' $co"!i"-e.'71<

S!(!eme"! of Fi"("ci(lPosi!io" $T(x(ble' &eferre.

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x T(x or Lo"#/

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+5 $:?@0' ?= $:1101' LT

&eferre. !(x li(bili!,0 &ecember ?10 71< $1101'

&eferre. !(x li(bili!, before (.6-s!me"! $:<07< :10<('   $@0?'

I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 71< $:9;08'

Amo-"!s "o! #i3e" i" !*e +roblem

71<( &eferre. T(x Ex+e"se5555555555555555555555555555555 10< 

&eferre. T(x Li(bili!,55555555555555555555555555 10<

KTo recor. !*e (.6-s!me"! for !*e i"cre(se i" !*e e"(c!e. !(x r(!e recor.e. 4*e" Q"o4"):710 [ $?= 7<='

C-rre"! T(x Ex+e"se55555555555555555555555555555555555 8807I"come T(x P(,(ble55555555555555555555555555555 8807

K$refer !o !(ble i" +(r! $('

&eferre. T(x Ex+e"se555555555555555555555555555555555 9;08&eferre. T(x Li(bili!,55555555555555555555555555 9;08

olutions Manual 1211 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/9 $Co"!i"-e.'

$(' (". $b' $co"!i"-e.'71@

S!(!eme"! of Fi"("ci(l

Posi!io" $T(x(ble' &eferre.

$ASPE'

C-rre"!Acco-"! T(x C(rr,i"# Tem+or(r, T(x T(x or Lo"#/

&ec5 ?10 71@ B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+5 $:9;708' ?= $:19089' LT

&eferre. !(x li(bili!,0 &ecember ?10 71@ $19089'&eferre. !(x li(bili!, before (.6-s!me"! $1101'

I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 71@ $:?09'

Amo-"!s "o! #i3e" i" !*e +roblem

71@C-rre"! T(x Ex+e"se55555555555555555555555555555555555 ;107@

I"come T(x P(,(ble55555555555555555555555555555 ;107@

K$refer !o !(ble i" +(r! $('

&eferre. T(x Ex+e"se555555555555555555555555555555555 ?09&eferre. T(x Li(bili!,55555555555555555555555555 ?09

olutions Manual 12111 Cha"ter 1

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PROBLEM 18/9 $Co"!i"-e.'

$(' (". $b' $co"!i"-e.'71

S!(!eme"! of Fi"("ci(lPosi!io" $T(x(ble' &eferre. 

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x T(x or Lo"#/&ec5 ?10 71 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+5 $:?9808' ?= $:190@9' LT

&eferre. !(x li(bili!,0 &ecember ?10 71 $190@9'&eferre. !(x li(bili!, before (.6-s!me"! $19089'

&ecr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x be"efi! for 71 :9?07

Amo-"!s "o! #i3e" i" !*e +roblem

71C-rre"! T(x Ex+e"se55555555555555555555555555555555555 1;?07

I"come T(x P(,(ble55555555555555555555555555555 1;?07K$refer !o !(ble i" +(r! $('

&eferre. T(x Li(bili!,5555555555555555555555555555555555 9?07&eferre. T(x Be"efi!5555555555555555555555555555 9?07

olutions Manual 1211% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/9 $Co"!i"-e.'

$c' 71<I"come before i"come !(x :970I"come !(x ex+e"se

C-rre"! :8807&eferre.   <;08<  1980<

Ne! i"come :710;<$:9;08 :10<'

olutions Manual 1211( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-5

$('B(sic C(lc-l(!io"s of C(+i!(l Cos! Allo4("ce0 &e+reci(!io" (". B(l("ces)

C/B

$A' $B' $A B' $C' $A C' Re3ersi"#

 Je(r B(se CCA %CC &e+rec5C(rr,i"#Amo-"! &iffere"ce

71? :100 X 7 = X 5< :10 : ;0 :17<0 :8<0 :7<0

719 ;0 X 7 = 180 70 17<0 <0 $<<0'

$b'719

  For $f'

S!(!eme"! of Fi"("ci(lPosi!io" $T(x(ble'

&eferre.T(x

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+5 :70 :<0 $:?0' ?<= $:10<' LT

&eferre. !(x li(bili!,0 &ecember ?10 719 $10<'&eferre. !(x (sse! before (.6-s!me"! $:7<0 X ?<=' 80<

I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719 $:1;07<'

olutions Manual 1211$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/< $Co"!i"-e.'

$b' $co"!i"-e.'

C(lc-l(!io" of c-rre"! i"come !(x ex+e"se)Acco-"!i"# i"come : 1090

Perm("e"! .iffere"ce !(x exem+! i"!eres! $@0'

10?90

Re3ersi"# .iffere"ce / K+(r! $(' <<0

T(x(ble i"come o" re#-l(r o+er(!io"s 1078<0

 I"come !(x ex+e"se (". +(,(ble ?< = : 99;0<

$c'C-rre"! T(x Ex+e"se55555555555555555555555555555555555 99;0<

I"come T(x P(,(ble55555555555555555555555555555 99;0<

&eferre. T(x Ex+e"se555555555555555555555555555555555 1;07<&eferre. T(x Li(bili!,55555555555555555555555555 10<&eferre. T(x Asse!555555555555555555555555555555 80<

 

Al!er"(!el,&eferre. T(x Asse!>Li(bili!,5555555555555555 1;07<

olutions Manual 1211) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/< $Co"!i"-e.'

$.' I"come before i"come !(x :1090I"come !(x ex+e"se

C-rre"! :99;0<&eferre. 1;07<

 

9@;0 

Ne! i"come : ;?10

Earnings "er shareNe! I"come   :;5?1

$e' Ne! .eferre. !(x li(bili!, (! &ecember ?10 7195

$See +(r! $b''

Lo"#/!erm li(bili!ies&eferre. !(x li(bili!, :10<

$f' T*e o"l, .iffere"ce0 (si.e from .iffere"! !ermi"olo#, !*(!mi#*! be -se. $f-!-re !(xes i"s!e(. of .eferre. !(xes' 4o-l.be i" !*e cl(ssific(!io" of !*e .eferre. !(x (cco-"!$s' o" !*es!(!eme"! of fi"("ci(l +osi!io"5 I" !*is c(se0 !*e s!(!eme"! of fi"("ci(l +osi!io" .isclos-re 4o-l. be !*e s(me -".er 

ASPEs f-!-re>.eferre. i"come !(x me!*o. (s -".er IFRSsi"ce (ll !em+or(r, .iffere"ces rel(!e !o .iffere"ces be!4ee"!*e !(x b(se (". c(rr,i"# (mo-"! of +ro+er!,0 +l("! (".e-i+me"! 4*ic* (re cl(ssifie. (s "o"/c-rre"!5 T*erefore0!*e .eferre. !(x li(bili!, 4o-l. be i"cl-.e. 4i!* "o"/c-rre"!li(bili!ies5

olutions Manual 1211* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-6

$('

PPDE %CCC(rr,i"#Amo-"! &iffere"ce T(x ?=

&eferre.T(x

 B(l5 &ec5 ?10 71? : ;;80 : 107<@0 : $7<80' : $09' Li(bili!,

For 719$1;70

' $1<0' $10' $<01'

 B(l5 &ec5 ?10 719 8@0 10810 $7<0' $870<' Li(bili!,

For 71<$1@?0<

' $180' 1@0< 90;<

B(l5 &ec5 ?10 71< : @970< : ;10 : $7<80<' : $0<<' Li(bili!,

Res!r-c!-ri"# C*(r#es T(x B(seAccr-e.Li(bili!, &iffere"ce T(x ?=

&eferre.T(x

 B(l5 &ec5 ?10 71? :  :

$1;;0<:1;;0<

:<;08< Asse!

For 719 1?

10< $1?10<' $?;09<'

 B(l5 &ec5 ?10 719 $@80'   @80 709 Asse!

For 71< @80   $@80' $709'

 B(l5 &ec5 ?10 71< :// : // : // : //

olutions Manual 1211+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/@ $Co"!i"-e.'

$(' $co"!i"-e.'

Profi! o" Pro+er!, S(le&eferre. Profi!

for T(x

&eferre. G>P.e.-c!e.from A>R &iffere"ce T(x ?=

&eferre.T(x

 B(l5 &ec5 ?10 71? : // // // //

 For 719$9@

08' : //' : $9@08' : $1909'

 B(l5 &ec5 ?10 719 $9@08'   // $9@08' $1909' Li(bili!,

For 71< 1<0@   // 1<0@ 90@8

B(l5 &ec5 ?10 71<$?1

07' : // : $?107' : $;0?@' Li(bili!,

olutions Manual 1211 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/@ $Co"!i"-e.'

$b'

Co"!i"-i"# o+er(!io"s) 719 71<

Acco-"!i"# i"come :8<0 :<7<0

Perm("e"! .iffere"ces)

No"/.e.-c!ible life i"s-r("ce 110 110

No"/!(x(ble .i3i.e".s $?07<' $?0<'  8<0< <?70<

Re3ersi"# .iffere"ces)

CCA D .e+reci(!io" $10' 1@0<

Res!r-c!-ri"# c*(r#es $1?10<' $@80'

Profi! o" +ro+er!, s(le $9@08' 1<0@

T(x(ble i"come @@709< 9;@0@

C-rre"! i"come !(xes ?= :1;80?< :1980;8

Discontinued operations:

Accounting income : 1808 :Permanent differences  

Reversing differences  

Taxable income   1808

Current income taxes – 30% $ 5,640 :

olutions Manual 1211- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/@ $Co"!i"-e.' $(' (". $c'

S!(!eme"! of Fi"("ci(l &e.-c!ible &eferre. $ASPE'Posi!io" $T(x(ble' T(x C-rre"!Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 71? B(se Amo-"! &iffere"ces R(!e $Li(bili!,' TermPPDE :;;80 :107<@0 $:7<80' ?= $:09

'LT

Res!r-c!-ri"# Li(bili!, // $1;;0<' 1;;0< ?= <;08< C&eferre. !(x li(bili!,0 &ecember ?10 71? $:10<<'

A! &ec5 ?1>1?0 !*e !o!(l li(bili!, 4(s ex+ec!e. !o be c-rre"!5

S!(!eme"! of Fi"("ci(l &e.-c!ible &eferre. $ASPE'Posi!io" $T(x(ble' T(x C-rre"!Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' TermPPDE :8@0 :10810 $:7<0' ?= $:870<

'LT

Res!r-c!-ri"# Li(bili!, // $@80' @80 ?= 709 C&eferre. G>P o" S(le$A>R'

// 9@08/ $9@08' ?= $1909' mixe.

&eferre. !(x li(bili!,0 &ecember ?10 719&eferre. !(x li(bili!, before (.6-s!me"!I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719

  $@019'  $10<<':$<80<;'

1>? of !*e rem(i"i"# G>P of :9@08 is ex+ec!e. !o be re(lie. i" e(c* of 71<0 71@0 (".710 m(Qi"# ?= of $1>? X :9@08' :90@8 ( c-rre"! (mo-"!0 (". ?= of $7>? X :9@08' :;0?@ ( lo"#/!erm (mo-"! (! &ec5 ?1>195

olutions Manual 121% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/@ $Co"!i"-e.'

$(' (". $c' $Co"!i"-e.'

S!(!eme"! of Fi"("ci(l &e.-c!ible &eferre. $ASPE'Posi!io" $T(x(ble' T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! Lo"#/&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

PPDE :@970< :;10 $:7<80<' ?= $:0<<' LTRes!r-c!-ri"# Li(bili!, // // // ?= // C&eferre. G>P o" S(le $A>R'

// ?107 $?107' ?= $;0?@' mixe.&eferre. !(x li(bili!,0 &ecember ?10 71<&eferre. !(x li(bili!, before (.6-s!me"!I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 71<

  $8@0;1'  $@019'$:10'

1>7 of !*e rem(i"i"# G>P of :?107 is ex+ec!e. !o be re(lie. i" e(c* of 71@ (". 710m(Qi"# ?= of $1>7 X :?107' :90@8 ( c-rre"! (mo-"!0 (". ?= of $1>7 X :?107'

:90@8 ( lo"#/!erm (mo-"! (! &ec5 ?1>1<5

olutions Manual 121%1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/@ $Co"!i"-e.'

$c' &ecember ?10 719

C-rre"! T(x Ex+e"se55555555555555555555555555555555555555555555555 1;80?<C-rre"! T(x Ex+e"se &isco"!i"-e. O+er(!io"s <0@9I"come T(x P(,(ble 5555555555555555555555555555555555555555790?<55555555555555555555555555555555555555555555555555555555555555

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555555 <80<;Deferred Tax Liability............................... 58,590

&ecember ?10 71<

C-rre"! T(x Ex+e"se5555555555555555555555555555555555555555555 1980;8I"come T(x P(,(ble $:9;<0?< X 5?'55555555551980;85555555555555555555555555555555555555555555555555555555555

&eferre. T(x Ex+e"se555555555555555555555555555555555555555555 10&eferre. T(x Li(bili!,55555555555555555555555555555555555 10

olutions Manual 121%% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/@ $Co"!i"-e.'

$.'

B(l("ce s*ee! 719

C-rre"! (sse!s)&eferre. !(x (sse! $:709 :90@8' :1<07

No"/c-rre"! li(bili!ies)&eferre. !(x li(bili!, $:;0?@ :870<' ;108@

B(l("ce s*ee! 71<C-rre"! li(bili!,)

&eferre. !(x li(bili!, :90@8No"/c-rre"! li(bili!ies)

&eferre. !(x li(bili!, $:90@8 :0<<' 8707?

Under ASPE, deferred tax assets and deferred tax liabilities are

segregated into current and non-current categories. The

classification of an individual deferred tax liability or asset as

current or non-current is determined by the classification of the

asset or liability underlying the specific temporary difference.

olutions Manual 121%( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/@ $Co"!i"-e.'

$e'

I"come S!(!eme"! 719

I"come from co"!i"-i"# o+er(!io"s beforei"come !(x :8<0

I"come !(x

  C-rre"! !(x :1;80?<

&eferre. !(x <80<; 7<0?7<

I"come from co"!i"-i"# o+er(!io"s <;70@<

&isco"!i"-e. o+er(!io"s

  G(i" o" .is+os(l of o+er(!io"s 1808

Less (++lic(ble i"come !(x <0@9 1?01@

Ne! i"come :@<08?<

I"come S!(!eme"! 71<

I"come before i"come !(x :<7<0

I"come !(x

  C-rre"! !(x : 1980;8

&eferre. !(x 10 1<;0<

Ne! i"come :?@<07<

olutions Manual 121%$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/@ $Co"!i"-e.'

$f'

No"e of !*e c(lc-l(!io"s 4o-l. c*("#e0 (l!*o-#* .iffere"!

!ermi"olo#, mi#*! be -se. $f-!-re !(xes i"s!e(. of .eferre.!(xes'5 T*e o"l, .iffere"ce 4o-l. be !*e cl(ssific(!io" of !*e.eferre. (cco-"!s o" !*e s!(!eme"! of fi"("ci(l +osi!io"5

B(l("ce s*ee! 719No"/c-rre"! li(bili!ies)

&eferre. !(x li(bili!, $:870< :1909 :709' :@019

B(l("ce s*ee! 71<

No"/c-rre"! li(bili!ies)&eferre. !(x li(bili!, $:0<< :;0?@' :8@0;1

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

olutions Manual 121%) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

 PROBLEM 18-7

$(' F-!-re !(x(ble (mo-"!s i"cre(se f-!-re !(x(ble i"come

rel(!i3e !o +re/!(x (cco-"!i"# i"come .-e !o exis!i"#!(x(ble !em+or(r, .iffere"ces5 F-!-re .e.-c!ible (mo-"!s.ecre(se f-!-re !(x(ble i"come rel(!i3e !o +re/!(x(cco-"!i"# i"come .-e !o exis!i"# .e.-c!ible !em+or(r,.iffere"ces5

A .eferre. !(x li(bili!, s*o-l. be recor.e. for !*e f-!-rei"come !(x co"se-e"ces (!!rib-!(ble !o !*e f-!-re !(x(ble(mo-"!s sc*e.-le. (". ( .eferre. !(x (sse! s*o-l. berecor.e. for !*e f-!-re !(x co"se-e"ces (!!rib-!(ble !o

!*e f-!-re .e.-c!ible (mo-"!s sc*e.-le.5

$b' See "ex! !4o +(#es for .eferre. !(xes5

C-rre"! T(x Ex+e"se555555555555555555555555555555555 1<0I"come T(x P(,(ble5555555555555555555555555555

 

1<0

$:<0 !(x(ble i"come X ?='

$c' I mi#*! be co"cer"e. !*(! !*e com+(", 4ill "o! #e"er(!e

e"o-#* !(x(ble i"come i" !*e f-!-re from 4*ic* !o .e.-c!!*e f-!-re .e.-c!ible (mo-"!s5 If !*is 4ere !*e c(se0 !*eir f-!-re .e.-c!ibili!, 4o-l. "o! -(lif, (s *(3i"# (sse!3(l-e5

To !*e ex!e"! !*(! !*e .eferre. !(x (sse! 4ill "o! bere(lie.0 (" (llo4("ce !o re.-ce !*e .eferre. !(x (sse!(cco-"! !o !*e ex+ec!e. re(li(ble 3(l-e s*o-l. be cre(!e.5I! becomes ( 3(l-(!io" (cco-"!0 4*ic* 4ill !*e" e"s-re !*(!!*e (sse! is re.-ce. !o !*e re(li(ble 3(l-e for fi"("ci(ls!(!eme"! re+or!i"# +-r+oses5 T*e -se of !*e (llo4("ce(cco-"! is o+!io"(l5 A" (l!er"(!i3e (++ro(c* 4o-l. be !oes!(blis* ( .eferre. !(x (sse! o"l, for !*e +or!io" of !*ef-!-re !(xes es!im(!e. more liQel, !*(" "o! !o be re(lie.5

olutions Manual 121%* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/ $Co"!i"-e.'

$b'

Mixe. r(!es &eferre. T(xes

71< 71@ 71 718 To!(l

 F-!-re !(x(ble (mo-"!s $:<0' $:<0'  $:<0

'  $:<0

'  $:?0

'

 T(x r(!e e"(c!e. for !*e ,e(r 78= 7@= 79= 79=

&eferre. !(x $li(bili!,' $:710' $:1;0<' $:180' $:180' $:@0<'

 

71< 71@ 71 718 To!(l

 F-!-re .e.-c!ible (mo-"!s :7090 :7090

 T(x r(!e e"(c!e. for !*e ,e(r 78= 7@= 79= 79=

&eferre. !(x (sse! :<@0 :<@0

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/ $Co"!i"-e.'

$b' $co"!i"-e.'

B(l("ce $T(x(ble' &eferre.  $ASPE'

S*ee! &e.-c!ible T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

%"Q"o4" see !(ble i" $b' $:<0' 78= $:710' C$1'

%"Q"o4" see !(ble i" $b' $77<0' Mixe. $<<0<' LT

%"Q"o4" see !(ble i" $b' 7090 79= <@0 LT

&eferre. !(x (sse!0 &ecember ?10 719 9;;0<&eferre. !(x (sse!>li(bili!, before (.6-s!me"!

I"cr5 i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 719 :9;;0<

No! #i3e" i" !*e +roblem$1' T*is (ss-mes !*(! ei!*er \ of !*e rel(!e. b(l("ce s*ee! (cco-"! is re+or!e. i" ( c-rre"!cl(ssific(!io" o" !*e b(l("ce s*ee!0 or !*ere is "o rel(!e. b(l("ce s*ee! (cco-"! re+or!e.5

&eferre. T(x Asse!55555555555555555555555555555555555555 <@0&eferre. T(x Be"efi!5555555555555555555555555555   9;;0<

  &eferre. T(x Li(bili!,55555555555555555555555555 @0<

Al!er"(!el,&eferre. T(x Asse!>Li(bili!,55555555555555555555555 9;;0<

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/ $Co"!i"-e.'

$.'&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 980

Allo4("ce !o Re.-ce &eferre. T(x Asse! !o Ex+ec!e. Re(li(ble (l-e555555555 980

$:700 X 79= :980'

$e'

F-!-re T(xes

71 718 To!(l

 F-!-re .e.-c!ible (mo-"!s:@0

:10<0  :7010

T(x r(!e e"(c!e. for !*e ,e(r 79= 79=

F-!-re !(x (sse! $"e!' :1990 :?@0 :<90

Tem+or(r, .iffere"ce f-!-re .e.-c!ible (mo-"!)

Re-ire. b(l("ce $"e! (bo3e':<90

O+e"i"# b(l("ce recor.e. i" 719 <@0

Re-ire. b(l("ce i" (llo4("ce : 70

Allo4("ce !o Re.-ce &eferre. T(x Asse! !o Ex+ec!e. Re(li(ble (l-e555555555 980&eferre. T(x Be"efi!55555555555555555555555555555555555 980

$:980 :70 :980'

olutions Manual 121%- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/ $Co"!i"-e.'F-!-re T(xes

$f' 71< mixe. r(!es 71@ 71 718 To!(l

 F-!-re !(x(ble (mo-"!s $:<0'  $:<0

' $:<0'  $:77<0

'

 T(x r(!e e"(c!e. for !*e ,e(r 7@= 79= 79=

&eferre. !(x $li(bili!,' $:1;0<' $:180' $:180' $:<<0<'

71@ 71 718 To!(l F-!-re .e.-c!ible (mo-"!s :@0 :10<0 :7010

 T(x r(!e e"(c!e. for !*e ,e(r 7@= 79= 79=

&eferre. !(x (sse! :1990 :?@0 :<90

B(l("ce $T(x(ble' &eferre.  $ASPE'

S*ee! &e.-c!ible T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

%"Q"o4" see !(ble (bo3e $:<0' 7@= $:1;0<' C

%"Q"o4" see !(ble (bo3e $1<0' 79= $?@0' LT

%"Q"o4" see !(ble (bo3e 7010 79= <90 LT

&eferre. !(x (sse!0 &ecember ?10 71< 9980<&eferre. !(x (sse! $"e!' before (.6-s!me"! $:9;;0< :980' 1;0<

I"cr5 i" .eferre. !(x (sse!0 (". f-!-re !(x be"efi! $"e!' for 71< :97;0

No! #i3e" i" !*e +roblem

olutions Manual 121( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/ $Co"!i"-e.'

$f' $co"!i"-e.'B(l("ce s*ee! cl(ssific(!io"

Refer !o l(s! !4o col-m"s i" !(bles i" +(r! $b' (". $f' (bo3e571< 719No"/c-rre"! (sse!s

&eferre. !(x (sse! $"e! of   (llo4("ce' :9@807 :90<1

Current liabilitiesDeferred tax liability 19,500 21,000

 1 B(l("ce of &eferre. T(x (cco-"!s &ecember ?10 719)

&eferre. !(x (sse! LT : <@0Less) Allo4("ce !o re.-ce .eferre. !(x  (sse! !o ex+ec!e. re(li(ble 3(l-e/+(r! $.' $980'

;@0

Less) &eferre. !(x li(bili!, LT $<<0<'

Ne! .eferre. !(x (sse! "o"/c-rre"! :90<

 7 B(l("ce of &eferre. T(x (cco-"!s &ecember ?10 71<)

&eferre. !(x (sse! LT :<@0Less) Allo4("ce !o re.-ce .eferre. !(x(sse! !o ex+ec!e. re(li(ble 3(l-e/+(r! $e' $70'

<90

Less) &eferre. !(x li(bili!, LT $?@0'

Ne! .eferre. !(x (sse! "o"/c-rre"! :9@80

If !*e com+(", .i. "o! -se !*e (llo4("ce me!*o.0 !*e (mo-"!sre+or!e. for !*e .eferre. !(x (sse! (cco-"! 4o-l. *(3e bee"

re+or!e. o" !*e b(l("ce s*ee! (s !*e s(me "e! (mo-"! (si".ic(!e. (bo3e5 If "o (llo4("ce is -se.0 o"l, !*e re(li(ble(mo-"! is reco#"ie. i"i!i(ll,5

olutions Manual 121(1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/ $Co"!i"-e.'

$#'

71< 719No"/c-rre"! (sse!s&eferre. !(x (sse! :9980<7 :1;0<1

1 See c(lc-l(!io"s i" $f' (bo3e) :90< :7107 See c(lc-l(!io"s i" $f' (bo3e) :9@80 :1;0<

No!e !*(! s!ric! (++lic(!io" of IFRS 4o-l. re-ire !*(! "o(llo4("ce (cco-"! be -se.5 I"s!e(.0 ( .eferre. !(x (sse! 4o-l.

be reco#"ie. o"l, !o !*e ex!e"! !*(! i! is +rob(ble !*(! !(x(blei"come 4ill be (3(il(ble (#(i"s! 4*ic* !*e .e.-c!ible !em+or(r,.iffere"ce c(" be -se.5

Also0 IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies bere+or!e. (s "o"/c-rre"! i!ems o" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 121(% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-8

$(' 71? b(l("ces 4i!* mixe. !(x r(!es)

&eferre. T(xes

F-!-re !(x(ble (mo-"!s) 719 71< 71@ To!(l

CCA 3s5 .e+reci(!io" $:10<'  $:170<

'  $:70

'  $:?70

'

T(x r(!e e"(c!e. for !*e ,e(r ?= 7;= 78=

&eferre. !(x li(bili!, $:<07<'  $:?0@7<

'  $:<@

'  $:;09?<

'

F-!-re .e.-c!ible (mo-"!s 719 71< 71@ To!(l

Pe"sio" li(bili!, 110 110 170@ ?90@

T(x r(!e e"(c!e. for !*e ,e(r ?= 7;= 78=

&eferre. !(x (sse! : ?0? : ?01; : ?0<78 : 1018

olutions Manual 121(( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/8 $Co"!i"-e.'

$(' $co"!i"-e.'

S!(!eme"! of    &e.-c!ible   &eferre. For $e'

Fi"("ci(l Posi!io"   $T(x(ble'   T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 71? B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 De-i+me"! :;?0 :17<0 $:?70' Mixe. $:;09?<' $1' LT(rr("!, Li(bili!, // $180<' 180< ?= <0<< C

Pe"sio" Li(bili!, // $?90@' ?90@ Mixe. 1018 $1' LT

&eferre. !(x (sse!0 &ecember ?10 71? :@01??

$1' from !(ble (bo3e

S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io")

No"/c-rre"! (sse!s)&eferre. !(x (sse! :@01??

 $:<0<< :1018 :;09?<'

IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies be re+or!e. (s "o"/c-rre"! i!ems o"( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 121($ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/8 $Co"!i"-e.'

$b' 719 f-!-re !(xes mixe. !(x r(!es

&eferre. T(xes

F-!-re !(x(ble (mo-"!s) 71< 71@ To!(l

CCA 3s5 &e+reci(!io" $:170<' $:70' $:190<'

T(x r(!e e"(c!e. for !*e ,e(r 7;= 78=

&eferre. !(x li(bili!, $:?0@7<' $:<@' $:9018<'

F-!-re .e.-c!ible (mo-"!s 71< 71@ To!(l

Pe"sio" li(bili!, 110 170@ 7?0@

T(x r(!e e"(c!e. for !*e ,e(r 7;= 78=

&eferre. !(x (sse! : ?01; : ?0<78 : @018

S!(!eme"! of &e.-c!ible &eferre. For $e'Fi"("ci(l Posi!io" $T(x(ble' T(x C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pro+er!,0 +l("!0 D e-i+me"! $:190<' Mixe. $:9018<' $1' LT(rr("!, Li(bili!, // $770?' 770? 7;= @09@ CPe"sio" Li(bili!, // $7?0@' 7?0@ Mixe. @018 $1' LT&eferre. !(x (sse!0 &ecember ?10 719&eferre. !(x (sse! before (.6-s!me"!I"cr5 i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 719

 ;0  @01??:708@

"o! #i3e" i" !*e +roblem $1' from !(ble (bo3e

olutions Manual 121() Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/8 $Co"!i"-e.'

$c'

C(lc-l(!io" of c-rre"! !(x ex+e"se 719)

Acco-"!i"# i"come : 1;09Perm("e"! .iffere"ce .i3i.e".s $90?'

 Perm("e"! .iffere"ce #olf .-es 70

  17<01Re3ersi"# .iffere"ces

(rr("!, Ex+e"se :780?

 (rr("!, P(,me"!s $790<' ?08

Pe"sio" Ex+e"se Reco#"ie. <;0

 T(x &e.-c!ible Pe"sio" P(,me"!s $0' $110'

&e+reci(!io" CCA 10<T(x(ble i"come :1?<09

C-rre"! i"come !(xes ?= :90@7

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 90@7I"come T(x P(,(ble555555555555555555555555555555555555

 

90@7

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 708@&eferre. T(x Be"efi!55555555555555555555555555555555555

 

708@

$.'

I"come s!(!eme"! +rese"!(!io" 719)

I"come before i"come !(x :1;09

I"come !(x

  C-rre"! !(x : 90@7

&eferre. !(x $be"efi!' $708@' ?0<?

Ne! i"come : 10@9

olutions Manual 121(* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

 PROBLEM 18/8 $Co"!i"-e.'

 $.' $co"!i"-e.'

S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io")No"/c-rre"! (sse!s) 719 71?

&eferre. !(x (sse! :;01  :@01??7

C-rre"! li(bili!ies)I"come !(x +(,(ble :80@7 "o! #i3e"K:90@7 $9 X :80'

1 :@09@ :70<??7 :<0<< :<8?

IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies be re+or!e. (s "o"/c-rre"! i!ems o"( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

$e'From +(r! $('S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io")

C-rre"! (sse!s)&eferre. !(x (sse! :<0<<

No"/c-rre"! (sse!s&eferre. !(x (sse! :<8?

$:1018 :;09?<'

olutions Manual 121(+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/8 $Co"!i"-e.'

$e' $co"!i"-e.'

From +(r! $.'S!(!eme"! of fi"("ci(l +osi!io" cl(ssific(!io")C-rre"! (sse!s) 719 71?

&eferre. !(x (sse! :@09@ :<0<<

No"/c-rre"! (sse!s)&eferre. !(x (sse! :70<?? :<8?$:@018 :9018<'

C-rre"! li(bili!ies)I"come !(x +(,(ble :80@7 "o! #i3e"K:90@7 $9 X :80'

Under ASPE, deferred tax assets and deferred tax liabilities are segregated into current and

non-current categories. The classification of an individual deferred tax liability or asset as

current or non-current is determined by the classification of the asset or liability underlyingthe specific temporary difference.

I" (..i!io"0 (l!*o-#* "o"e of !*e c(lc-l(!io"s 4o-l. c*("#e $exce+! for !*e cl(ssific(!io".escribe. (bo3e'0 com+("ies (++l,i"# ASPE m(, -se .iffere"! !ermi"olo#,!*(! is0 f-!-rei"come !(x (cco-"!s i"s!e(. of .eferre. !(x (cco-"!s5

olutions Manual 121( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-9

P(r! 15 $(' Mixe. !(x r(!es

F-!-re ,e(rs

71< 71@ 71 718 71; To!(l

 F-!-re !(x(ble (mo-"!s $:?' $:?' $:?' $:7' $:1' $:107'

 T(x r(!e e"(c!e. for !*e ,e(r ?= ?= ?= ?<= ?<=

&eferre. !(x $li(bili!,' $:;' $:;' $:;' $:' $:?<' $:?<'

F-!-re ,e(rs

71< 71@ 71 718 71; To!(l

 F-!-re .e.-c!ible (mo-"!s :108 :108

T(x r(!e e"(c!e. for !*e ,e(r ?= ?= ?= ?<= ?<=

&eferre. !(x (sse! : @? : @?

olutions Manual 121(- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/; $Co"!i"-e.'

P(r! 15 $('

 

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

 

&eferre. T(x

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'

Pro+er!,0 +l("!0 D e-i+me"! $:107' Mixe. $:?<'

Li!i#(!io" li(bili!, 108 ?<= @?

&eferre. !(x (sse! $"e!'0 &ecember ?10 719 7<<

&eferre. !(x li(bili!, before (.6-s!me"! $<'

I"cre(se i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 719 :<<

"o! #i3e" i" !*e +roblemAli( 4ill re+or! ( &eferre. T(x Asse! of :7<< i" "o"/c-rre"! (sse!s o" !*e s!(!eme"! offi"("ci(l +osi!io"5

P(r! 15 $b'C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 107

I"come T(x P(,(ble555555555555555555555555555555555555 107$:90 X ?='

&eferre. T(x Li(bili!,555555555555555555555555555555555555555555 <&eferre. T(x Asse! 55 7<<

&eferre. T(x Be"efi!55555555555555555555555555555555555 <<

Al!er"(!el,) o"e .ebi! !o &eferre. T(x Asse!>Li(bili!, for :<<

olutions Manual 121$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/; $Co"!i"-e.'

P(r! 75 $(' Mixe. !(x r(!es

F-!-re ,e(rs

71< 71@ 71 718 To!(l

 F-!-re !(x(ble (mo-"!s $:9' $:9' $:9' $:9' $:10@' T(x r(!e e"(c!e. for !*e ,e(r ?= ?= ?= ?<=

&eferre. !(x $li(bili!,' $:17' $:17' $:17' $:19' $:<'

F-!-re ,e(rs

71< 71@ 71 718 To!(l

 F-!-re .e.-c!ible (mo-"!s :?0 :?0

T(x r(!e e"(c!e. for !*e ,e(r ?= ?= ?= ?<=

&eferre. !(x (sse! :; :;

olutions Manual 121$1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/; $Co"!i"-e.'

P(r! 75 $('

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

 

&eferre. T(xAcco-"! T(x C(rr,i"# Tem+or(r, T(x Asse!

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,'Pro+er!,0 +l("!0 D e-i+me"! $:10@' Mixe. $:<'

Li!i#(!io" li(bili!, ?0 ?= ;

&eferre. !(x (sse!0 &ecember ?10 719 9

&eferre. !(x (sse! before (.6-s!me"! @

&ecre(se i" .eferre. !(x (sse!0 (". .eferre. !(x ex+e"se for 719 :7

"o! #i3e" i" !*e +roblem

P(r! 75 $b'C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 107

I"come T(x P(,(ble555555555555555555555555555555555555 107

$:90 X ?='&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 7

&eferre. T(x Asse!55555555555555555555555555555555555555 7

olutions Manual 121$% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/; $Co"!i"-e.'

$c'

P(r! 1 All s!(!eme"! of fi"("ci(l +osi!io" .eferre. !(x (cco-"!s(re +rese"!e. (s "o"/c-rre"!0 re#(r.less of ori#i"5

Ali( Cor+5S!(!eme"! of Fi"("ci(l Posi!io" $+(r!i(l'

&ecember ?10 719

  No"/c-rre"! (sse!s&eferre. !(x (sse! :7<<

P(r! 7 All s!(!eme"! of fi"("ci(l +osi!io" .eferre. !(x (cco-"!s(re +rese"!e. (s "o"/c-rre"!0 re#(r.less of ori#i"5

]*oi Cor+5S!(!eme"! of Fi"("ci(l Posi!io" $+(r!i(l'

&ecember ?10 719

  No"/c-rre"! (sse!s&eferre. !(x (sse! :9

$.'

%".er ASPE0 !*e cl(ssific(!io" is co"!i"#e"! o" !*e b(l("ces*ee! cl(ssific(!io" of !*e !em+or(r, .iffere"ce -".erl,i"# !*e.eferre. !(x (mo-"!5 I" bo!* c(ses0 !*e +ro+er!,0 +l("! (".e-i+me"! (". !*e li!i#(!io" li(bili!, (re "o"/c-rre"! i!ems0 so (ll!*e .eferre. !(x (cco-"!s 4o-l. (lso be +rese"!e. (s "o"/c-rre"!5 T*erefore0 !*ere 4o-l. be "o .iffere"ce0 exce+! for (+ossible -se of .iffere"! !ermi"olo#, $f-!-re !(xes i"s!e(. of 

.eferre. !(xes'5

olutions Manual 121$( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-10

$('B(sic C(lc-l(!io"s of C(+i!(l Cos! Allo4("ce0 &e+reci(!io" (". B(l("ces)

C B

$A' $B' A B $C' C(rr,i"# Re3ersi"#

 Je(r B(se CCA %CC &e+rec5 Amo-"! &iffere"ce

719 :90 X 7< = X 5< : <0 : ?<0 :80 :?70 :?0

71< ?<0 X 7< = 80< 7@70< 80 790 $0<'

$b'719

S!(!eme"! of Fi"("ci(lPosi!io"

 

&e.-c!ible

 

&eferre.

$6'$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x T(x or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e Asse! Term

Pro+er!,0 +l("!0 D e-i+5 :?<0 :?70 :?0 ?= :;0 LT&eferre. !(x (sse!0 &ecember ?10 719 ;0&eferre. !(x (cco-"! before (.6-s!me"!

I"cr5 i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 719 :;0

$c'&eferre. T(x Asse!5555555555555555555555555555555555555555555555 ;0

&eferre. T(x Be"efi!55555555555555555555555555555555555 ;0

olutions Manual 121$$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/1 $Co"!i"-e.'

$c' $co"!i"-e.'

C-rre"! T(x Ex+e"se55555555555555555555555555555555555 1<0

I"come T(x P(,(ble55555555555555555555555555555 1<0$(mo-"! #i3e" i" !*e +roblem'

:1<0 !(x .-e for 719 Z ?= $719 !(x r(!e' :?<0!(x(ble i"come for 7195

$.' I"come before i"come !(x :?70(

I"come !(x ex+e"se

C-rre"! :1<0&eferre. $be"efi!'

 

$;0' ;@0Ne! i"come :7790

(Pre/!(x (cco-"!i"# i"come : XExcess .e+reci(!io" +er booQs Kfrom $(' (bo3e ?0 

T(x(ble i"come Kfrom $c' (bo3e :?<0

Sol3i"# for X X :?0 :?<0 X :?70 +re/!(x

(cco-"!i"# i"come5

olutions Manual 121$) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/1 $Co"!i"-e.'

$e'71<

S!(!eme"! of Fi"("ci(l

Posi!io"

 

&e.-c!ible

 

&eferre.

$6'$ASPE'

C-rre"!Acco-"! T(x C(rr,i"# Tem+or(r, T(x T(x or Lo"#/

&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e Asse! Term

Pro+er!,0 +l("! D e-i+5 :7@70< :790 :770< ?= :@0< LT

%"e(r"e. Re35 c-rre"! // $<0' <0 ?= 770< C

%"e(r"e. Re35 "o"/c-rr5 // $<0' <0 ?= 770< LT

&eferre. !(x (sse!0 &ecember ?10 71< <10<&eferre. !(x (sse! before (.6-s!me"! ;0

I"cr5 i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 71< :970<

* $150,000 unearned at end of 2015 divided by 2 years (2016 and 2017)

(f)

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 970<&eferre. T(x Be"efi!5555555555555555555555555555 970<

olutions Manual 121$* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/1 $Co"!i"-e.'

$f' co"!i"-e.

C-rre"! T(x Ex+e"se55555555555555555555555555555555555 890

I"come T(x P(,(ble55555555555555555555555555555 890$(mo-"! #i3e" i" !*e +roblem'

:890 !(x .-e for 71< Z ?= $719 !(x r(!e' :780!(x(ble i"come for 71<

$#' I"come before i"come !(x :1?0<.

I"come !(x ex+e"seC-rre"! :890&eferre. $be"efi!'   $970<' 9107< 

Ne! i"come : ;@07<

.Pre/!(x (cco-"!i"# i"come : X

CCA i" excess of .e+reci(!io" Kfrom $(' (bo3e $0<'Excess re"! collec!e. o3er re"! e(r"e. 1<0T(x(ble i"come Kfrom $f' (bo3e :780

Sol3i"# for X)X :1<0 :0< :780X :1?0< +re/!(x (cco-"!i"# i"come5

$*' Refer !o l(s! col-m" i" !(bles of +(r! $(' (". $e' (bo3e5

71< 719No"/c-rre"! (sse!s

&eferre. !(x (sse! :<10< :;0

($22,500 + $22,500 + $6,750)

IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies bere+or!e. (s "o"/c-rre"! i!ems o" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 121$+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/1 $Co"!i"-e.'

$i' *e" fi"("ci(l s!(!eme"!s of se3er(l le#(l e"!i!ies (reco"soli.(!e. i"!o o"e for fi"("ci(l re+or!i"# +-r+oses0 !*e+ossibili!, exis!s !*(! .eferre. !(x (cco-"!s o" !*ei".i3i.-(l s!(!eme"!s of fi"("ci(l +osi!io" co-l. be rel(!e.!o !(xes from .iffere"! 6-ris.ic!io"s5 Si"ce !*ere is "o ri#*!!o offse! !(xes be!4ee" 6-ris.ic!io"s0 !*ere is ( +ossibili!,of *(3i"# more !*(" o"e (cco-"! for .eferre. !(xesre+or!e. o" ( s!(!eme"! of fi"("ci(l +osi!io" $o"e for e(c*le#(l e"!i!,'5 %".er ASPE0 !*ere co-l. (lso be o"e c-rre"!(". o"e lo"# !erm .eferre. !(x (sse!>li(bili!, (cco-"! for e(c* le#(l e"!i!,5

$6'

Refer !o l(s! col-m" i" !(bles of +(r! $(' (". $e' (bo3e571< 719

C-rre"! (sse!s&eferre. !(x (sse! :770<

Non-current(sse!s&eferre. !(x (sse!55555555 7;07<* $9,000

*($22,500 + $6,750)

Under ASPE, deferred tax assets and deferred tax liabilities are

segregated into current and non-current categories. The

classification of an individual deferred tax liability or asset as

current or non-current is determined by the classification of the

asset or liability underlying the specific temporary difference.

olutions Manual 121$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-11

 $('

S!(!eme"! of Fi"("ci(l Posi!io" &e.-c!ible$T(x(ble' &eferre.T(x $ASPE'C-rre"!Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term(rr("!, li(bili!, // $?0' :?0 ?= :; CCo"s!r-c!io" i" +rocess 70 ?0 $?0' ?= $;0' CPro+er!,0 +l("!0 D e-i+me"! 770 790 $70' ?= $@0' LTL(". "o! #i3e" "o! #i3e" ?90< ?= 10?< LT&eferre. !(x li(bili!,0 &ecember ?10 719&eferre. !(x li(bili!, before (.6-s!me"!I"cr5 i" .eferre. !(x li(bili!,0 (". .eferre. !(x ex+e"se for 719

 $?0<'  $:?0<'

$Co"s!r-c!io" cos!s :70 Gross +rofi! :?0'  :9@0 X <=

To!(l .eferre. !(x ex+e"se719 : ?0<&eferre. !(x be"efi!:10?< : $10?<'&eferre. !(x ex+e"se : 1901

olutions Manual 121$- Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18/11 $Co"!i"-e.'

$b'Ne!

 i"comeRe!(i"e.E(r"i"#s To!(l

Acco-"!i"# i"come :@90 $:<0' :<80?

Perm("e"! .iffere"ce)

 No"/!(x(ble .i3i.e".s $109'   $109'  No"/.e.-c!ible fi"es   ?0< ?0<  No"/.e.-c!ible loss i" l(". 3(l-e  :9@0 X 7<= 110< 110<

Re3ersi"# .iffere"ces)(rr("!ies) excess of ex+e"se o3er

cl(ims +(i. $:1<0 :170' ?0 ?0Pro+er!,0 +l("!0 (". e-i+me"!) excess  of CCA o3er .e+reci(!io" ex+e"se  $:80 :@0' $70' $70'Co"s!r-c!io" i" Process) Excess of

re+or!e. co"s!r-c!io" +rofi! o3ercom+le!e. co"!r(c! me!*o.$:?0 :' $?0' $?0'

Loss o" l(". "o! .e.-c!ible -"!il f-!-re  ,e(rs ?90< ?90<

T(x(ble i"come :@<01 $:<0' :<;09

C-rre"! i"come !(xes (! ?= :1;0<? $:101' :1087

olutions Manual 121) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/11 $Co"!i"-e.'

$c'C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 1;0<?

I"come T(x P(,(ble555555555555555555555555555555555555 1087Re!(i"e. E(r"i"#s $!(x effec!'55555555555555555555 101

&eferre. T(x Ex+e"se 5555555555555555555555555555555555555555 ?0<&eferre. T(x Li(bili!,5555555555555555555555555555555555 ?0<

Al!er"(!el,0 if ( com+(", Qe+! ( se+(r(!e .eferre. !(x (cco-"!for e(c* !em+or(r, .iffere"ce)

&eferre. T(x Ex+e"se55555555555555555555555555555555555555555 1901

&eferre. T(x Asse! $(rr("!,'555555555555555555555555555 ;&eferre. T(x Li(bili!, $C5I5P5'5555555555555555555555 ;0&eferre. T(x Li(bili!, $PPDE'555555555555555555555 @0

&eferre. T(x Asse! $L(". 4ri!e.o4"'555555555555555 10?<&eferre. T(x Be"efi!55555555555555555555555555555555555 10?<

$.'

I"come s!(!eme"! +rese"!(!io")

I"come before i"come !(x :@90

I"come !(x

  C-rre"! !(x :1;0<?

  &eferre. !(x ?0< 7?078

Ne! i"come :907

olutions Manual 121)1 Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/11 $Co"!i"-e.'

$e'

S!(!eme"! of Re!(i"e. E(r"i"#s

B(l("ce W("-(r, 10 719 //A..) Ne! i"come :907

Less) Fi"("ci"# c*(r#e $:<0'

Less (++lic(ble !(x 101 $?0;;'

B(l("ce &ecember ?10 719 :?@0?

$f' S!(!eme"! of Fi"("ci(l Posi!io"Refer !o l(s! !4o col-m"s of !(ble i" $('5

No"/c-rre"! (sse!s&eferre. !(x (sse! $:10?< :@0' :90?<

C-rre"! li(bili!iesI"come !(x +(,(ble 1087&eferre. !(xliability ($9,000 – $900) 801

Under ASPE, deferred tax assets and deferred tax liabilities are

segregated into current and non-current categories. The

classification of an individual deferred tax liability or asset as

current or non-current is determined by the classification of the

asset or liability underlying the specific temporary difference.

olutions Manual 121)% Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/11 $Co"!i"-e.'

$#' &i3i.e. b,

 Acco-"!i"# ?= I"come

Acco-"!i"# i"come :@90 1;07 ?5=

No"/!(x(ble .i3i.e".s $109' $97' $5'=

No"/.e.-c!ible fi"es ?0< 10< 15@=No"/.e.-c!ible l(".4ri!e.o4" 110< ?09< <59=

7?078 ?@5?=

Effec!i3e !(x r(!e $:7?078 > :@90' ?@5?=

T*e effec!i3e !(x r(!e .iffers from !*e s!(!-!or, r(!e i" !*is c(sebec(-se of !*e effec! of !*e +erm("e"! .iffere"ces of .i3i.e".s0fi"es (". 7<= of !*e loss .-e !o 4ri!e.o4" of l(".5

(h) S!(!eme"! of Fi"("ci(l Posi!io"

C-rre"! li(bili!iesI"come !(x +(,(ble :1087

No"/c-rre"! li(bili!ies&eferre. !(xliability ?0<

  $:801 :90?<'

IFRS re-ire !*(! (ll .eferre. !(x (sse!s (". li(bili!ies bere+or!e. (s "o"/c-rre"! i!ems o" ( cl(ssifie. s!(!eme"! of fi"("ci(l +osi!io"5

olutions Manual 121)( Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18-12

$(' 71?

I"come T(x Recei3(ble71555555555555555555555555555 <0

$:7<0 X 7='

I"come T(x Recei3(ble711555555555555555555555555555 170 

$:@0 X 7='I"come T(x Recei3(ble717555555555555555555555555555 790  $:80 X ?='

C-rre"! T(x Be"efi!5555555555555555555555555555555555555 910

No!e) A" (cce+!(ble (l!er"(!i3e is !o recor. o"l, o"e I"come

T(x Recei3(ble (cco-"! for !*e (mo-"! of :9105&eferre. T(x Asse!55555555555555555555555555555555555555 1?0<

&eferre. T(x Be"efi!5555555555555555555555555555555555555555555555555555555555 1?0<

$:710 :7<0 :@0 :80 :9<0' 

$:9<0 X ?= :1?0<' 

719C-rre"! T(x Ex+e"se55555555555555555555555555555555555 0<

I"come T(x P(,(ble55555555555555555555555555555 0<K$:0 :9<0' X ?= 

&eferre. T(x Ex+e"se555555555555555555555555555555555 1?0<&eferre. T(x Asse!555555555555555555555555555555 1?0<$:1?0< :'

71<C-rre"! T(x Ex+e"se55555555555555555555555555555555555 770<

I"come T(x P(,(ble $:;0 X 7<='5 770<

olutions Manual 121)$ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/17 $Co"!i"-e.'

(b) A" i"come !(x recei3(ble (cco-"! !o!(lli"# :910 4ill bere+or!e. -".er c-rre"! (sse!s o" !*e s!(!eme"! of fi"("ci(l+osi!io" (! &ecember ?10 71?5 T*is !,+e of recei3(ble is

-s-(ll, lis!e. imme.i(!el, (bo3e i"3e"!or, i" !*e c-rre"!(sse! sec!io"5 T*is recei3(ble is "orm(ll, collec!ible 4i!*i"!4o mo"!*s of fili"# !*e (me".me"! !o !*e !(x re!-r"sreflec!i"# !*e c(rr,b(cQ5 %".er ASPE0 ( .eferre. !(x (sse!of :1?0< s*o-l. (lso be cl(ssifie. (s ( c-rre"! (sse!bec(-se !*e be"efi!s of !*e loss c(rr,for4(r. (re ex+ec!e.!o be re(lie. i" !*e ,e(r !*(! imme.i(!el, follo4s !*e loss,e(r0 4*ic* me("s !*e be"efi!s (re ex+ec!e. !o be re(lie.i" 7195 A c-rre"! .eferre. !(x (sse! is -s-(ll, lis!e. (! or 

"e(r !*e e". of !*e lis! of c-rre"! (sse!s o" !*e b(l("ces*ee!5 Also0 re!(i"e. e(r"i"#s is i"cre(se. b, :<90<$:910 :1?0<' (s ( res-l! of !*e e"!ries !o recor. !*ebe"efi!s of !*e loss c(rr,b(cQ (". !*e loss c(rr,for4(r.5

If C(rl, I"c5 re+or!s -".er IFRS0 !*e .eferre. !(x (sse!rel(!e. !o !*e loss c(rr,for4(r. 4o-l. be cl(ssifie. (s ("o"/c-rre"! (sse! o" !*e s!(!eme"! of fi"("ci(l +osi!io"5

$c' 71? I"come S!(!eme"!

O+er(!i"# loss before i"come !(x $:710'

I"come !(x be"efi!C-rre"! be"efi! .-e !o loss c(rr,b(cQ :910&eferre. be"efi! .-e !o loss c(rr,for4(r. 1?0< <90<

 

Ne! loss $:1<<0<'

$.' 719 I"come S!(!eme"!I"come before i"come !(x :0I"come !(x ex+e"se

C-rre"! :0<(

&eferre. 1?0< 710Ne! i"come :9;0 

( K$:0 :9<0' X ?=

olutions Manual 121)) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/17 $Co"!i"-e.'

$e' 71?

I"come T(x Recei3(ble71555555555555555555555555555 <0

$:7<0 X 7='I"come T(x Recei3(ble711555555555555555555555555555 170 

$:@0 X 7='I"come T(x Recei3(ble717555555555555555555555555555 790 

$:80 X ?='C-rre"! T(x Be"efi!5555555555555555555555555555555555555 910

No!e) A" (cce+!(ble (l!er"(!i3e is !o recor. o"l, o"e I"comeT(x Recei3(ble (cco-"! for !*e (mo-"! of :9105Al!*o-#* i!s rel(!e. +ossible i"come !(x be"efi! is "o!

reco#"ie. i" !*e (cco-"!s0 C(rl, I"c5 *(s ( !(x lossc(rr,for4(r. of :9<0 4*ic* is re-ire. !o be .isclose.5

719C-rre"! T(x Ex+e"se55555555555555555555555555555555555 0<

I"come T(x P(,(ble55555555555555555555555555555 0<K$:0 :9<0' X ?= 

2015

C-rre"! T(x Ex+e"se55555555555555555555555555555555555 770<I"come T(x P(,(ble $:;0 X 7<='5 770<

$f' 71?) e"!r, for c-rre"! !(xes "o c*("#e71?) if ( 3(l-(!io" (llo4("ce is -se.0 !*e f-ll i"come !(xbe"efi! (". .eferre. !(x (sse! rel(!e. !o !*e !(x lossc(rr,for4(r. is reco#"ie. (". !*e" offse! b, !*e(llo4("ce0 (s follo4s5

&eferre. T(x Asse!55555555555555555555555555555555555555 1?0<

&eferre. T(x Be"efi!555555555555555555555555555 1?0<$:9<0 X ?= :1?0<'

olutions Manual 121)* Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/17 $Co"!i"-e.'

$f' $Co"!i"-e.'

&eferre. T(x Ex+e"se55555555555555555555555555555555 1?0<Allo4("ce !o Re.-ce &eferre.

T(x Asse! !o Ex+5 Re(li(ble (l-e 1?0<$:1?0< :'

719) e"!r, for c-rre"! !(xes "o c*("#e719) bec(-se !*e !(x loss c(rr,for4(r. *(s "o4 bee" -se.0

bo!* !*e (mo-"! i" !*e .eferre. !(x (cco-"! (". i" i!s(llo4("ce (cco-"! m-s! be remo3e.0 (s follo4s5

&eferre. T(x Ex+e"se 5555555555555555555555555555555 1?0<&eferre. T(x Asse!555555555555555555555555555 1?0<

Allo4("ce !o Re.-ce &eferre. T(xAsse! !o Ex+5 Re(li(ble (l-e55 5 1?0<

&eferre. T(x Be"efi!555555555555555555555555555 1?0<

Al!er"(!i3el,0 o"e e"!r, co-l. *(3e bee" m(.e)Allo4("ce !o Re.-ce &eferre. T(x

Asse! !o Ex+5 Re(li(ble (l-e55 5 1?0<&eferre. T(x Asse!555555555555555555555555555 1?0<

71<) No c*("#e !o +(r! $e' e"!r,5

olutions Manual 121)+ Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/17 $Co"!i"-e.'

(g)2013 Income Statement

O+er(!i"# loss before i"come !(x $:710'I"come !(x be"efi!  C-rre"! be"efi! .-e !o loss c(rr,b(cQ 910Ne! loss $:1@;0

'

2014I"come Statement

I"come before i"come !(x :0I"come !(x ex+e"se C-rre"! (   0<

Ne! i"come :@70< 

( K$:0 :9<0' X ?=

$*' %si"# !*e 3(l-(!io" (llo4("ce i"s!e(. of (++l,i"# !*ere.-c!io" i" 3(l-e .irec!l, .oes "o! *(3e (", im+(c! o"c(s* flo4s5 T*e -se of !*e co"!r( (llo4("ce sim+l, +ermi!s!*e recor.i"# of !*e f-ll be"efi!s (ssoci(!e. 4i!* (ll f-!-re.e.-c!ible (mo-"!s i" !*e (sse! (cco-"!5 T*is f(cili!(!es

!r(cQi"# for m("(#eme"! +-r+oses5 I! *(s "o -se for fi"("ci(l re+or!i"# +-r+oses exce+!0 +er*(+s0 for !*e!r("s+(re"c, of !*e i"form(!io"5 Re(.ers c(" see !*e !o!(l+ossible be"efi!s (". !*e ex!e"! !o 4*ic* m("(#eme"! *(s

 6-.#e. !*e, 4ill "o! be re(lie.5 %se of !*e (llo4("ce *(s"o im+(c! o" c(s* flo4s5

olutions Manual 121) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18-13

$(' :1?<0 x ?<= :907<0 .eferre. !(x li(bili!,0 &ecember?15 71?5$b' T*e +rior +erio. error *(s !*e follo4i"# effec! o" !*e

&ecember ?10 71? s!(!eme"! of fi"("ci(l +osi!io") T*e

l(". is -".ers!(!e. b, :900 re!(i"e. e(r"i"#s is

-".ers!(!e. b, !*e :90 error i" !*e ex+e"ses o" !*e

71? i"come s!(!eme"! (". o3ers!(!e. b, !*e i"come !(x

effec! $?<= of :90 :190'0 (". !*e i"come !(x

+(,(ble (cco-"! is -".ers!(!e. b, :1905

L(". 90  Re!(i"e. E(r"i"#s 90Re!(i"e. E(r"i"#s 190  I"come T(x P(,(ble 190To reco#"ie (..i!io"(l i"come !(x +(,(bleo" !*e (mo-"! .e.-c!e. i" error i" 71?5$71? !(x re!-r" is refile.'

$c'Acco-"!i"# I"come :10@9<0A..)  Golf cl-b .-es  No" .e.-c!ible i"!eres! cos!s

90<70<

  &e+reci(!io" ex+e"se ?@<0  Excess of ,e(rs b(. .eb! ex+e"se o3er !(x

.e.-c!ible (mo-"!70

Less) CCA $?0'T(x(ble I"come :10?0

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PROBLEM 18/1? $Co"!i"-e.'

$c' $co"!i"-e.'

Asse! >Li(bili!, T(x B(se C(rr,i"#Amo-"! &e.-c!ible >$T(x(ble'Tem+or(r,&iffere"ce

T(xR(!e &eferre.T(x$Li(bili!,'Asse!

Pro+er!,0+l("!0 (".e-i+me"!

:;??0 :10?<70 :1@0

  :?@<0

:10?0

: $0' ?<= : $790<'

Allo4("cefor.o-b!f-l(cco-"!s

"o! #i3e" "o!#i3e"

70 ?<= 0

&eferre. !(x li(bili!,0 &ec5 ?10 719B(l("ce before (.6-s!me"!A.6-s!me"! re-ire. !o .eferre. !(x li(bili!,0 (". .eferre.!(x be"efi!0 719

:$10<'  $907<'

: 7;0<

C(rr,i"# (mo-"!0 &ec5 ?10 71? :10?<70  F-!-re !(x(ble (mo-"!0 &ec5 ?10 71? $ 1?<0'  %CC0 &ec5 ?10 71? 10710  719 (..i!io" !o cl(ss 1@0  Less 719 CCA $ ?0'  %CC0 &ec5 ?10 719 : ;??0

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PROBLEM 18/1? $Co"!i"-e.'

$c' $co"!i"-e.'

C-rre"! !(x ex+e"se :10?0 x ?<= :@0;<F-!-re !(x ex+e"se :7;0< $be"efi!'To!(l i"come !(x ex+e"se :@0;</7;0< :<807

C-rre"! !(x ex+e"se @0;<  I"come !(x +(,(ble @0;<&eferre. !(x li(bili!, 7;0<  &eferre. !(x be"efi! 7;0<

$.'

I"come S!(!eme"!)Ne! i"come before i"come !(x :10@9<0Less) I"come !(x ex+e"se

C-rre"! !(x ex+e"se :@0;<&eferre. !(x $be"efi!' $7;0<' <807

Ne! I"come :10@@08

S!(!eme"! of Re!(i"e. E(r"i"#s)Re!(i"e. E(r"i"#s0 W("-(r, 10 719  As +re3io-sl, re+or!e. :<0@80

Correc!io" of +rior +erio. error0 "e! of i"come!(x of :190 7@0

Res!(!e. b(l("ce of Re!(i"e. E(r"i"#s <090A..) Ne! I"come 10@@08Re!(i"e. E(r"i"#s0 &ecember ?10 719 :@008

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-14

$('

2014:

S!(!eme"! of Fi"("ci(l Posi!io"

&e.-c!ible$T(x(ble'

&eferre.T(x

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! or Lo"#/&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pre+(i. Re"! // :8;0 $:8;0' 7= $:790?' CRe"! P(,(ble // $19@0' 19@0 7= ?;097 LT&eferre. !(x (sse!0 &ecember ?10 719&eferre. !(x (sse! before (.6-s!me"!I"cr5 i" .eferre. !(x (sse!0 (". .eferre. !(x be"efi! for 719

1<0?;  : 1<0?;

2015:

S!(!eme"! of Fi"("ci(l Posi!io"

&e.-c!ible$T(x(ble'

&eferre.T(x

$ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! Lo"#/&ec5 ?10 71< B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

Pre+(i. Re"! // :;70 $:;70' 7;= $:7@0@8' CRe"! P(,(ble // $1??0' 1??0 7;= ?80< LT&eferre. !(x (sse!0 &ecember ?10 71<&eferre. !(x (sse! before (.6-s!me"!

1108;  1<0?;

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&ecr5 i" .eferre. !(x (sse!0 (". .eferre. !(x ex+e"se for 71< $: ?0<'

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/19 $Co"!i"-e.'

$b'

719)

Acco-"!i"# i"come :8890

Perm("e"! .iffere"ces)

Golf cl-b .-es :1?0

I"!eres! i"c-rre. !o e(r" exem+! i"come 90 10;10

Re3ersi"# .iffere"ces)

Pre+(i. re"! .e.-c!ible 4*e" +(i. $8;0'

Accr-e. re"! ex+e"se "o! ,e! .e.-c!ible  19@0T(x(ble i"come :;<80

C-rre"! i"come !(xes (! 78= :7@8079

71<)

Acco-"!i"# i"come :;;0

Perm("e"! .iffere"ces)

Golf cl-b .-es :110

I"!eres! i"c-rre. !o e(r" exem+! i"come @0 1010190

Re3ersi"# .iffere"ces)Excess of re"! +(i. o3er re"! ex+e"sereco#"ie.

 $:;70 :8;0' $?0'Excess of re"! +(i. o3er re"! ex+e"sereco#"ie.

 $:19@0 :1??0' $1?0'

T(x(ble i"come :;;80

C-rre"! i"come !(xes (! 7;= :78;097

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/19 $Co"!i"-e.'

$c'

719 Wo-r"(l e"!ries)

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 7@8079I"come T(x P(,(ble555555555555555555555555555555555555 7@8079

&eferre. T(x Asse!5555555555555555555555555555555555555555555555 1<0?;&eferre. T(x Be"efi!55555555555555555555555555555555555 1<0?;

71< Wo-r"(l e"!ries)

C-rre"! T(x Ex+e"se555555555555555555555555555555555555555555 78;097I"come T(x P(,(ble555555555555555555555555555555555555 78;097

&eferre. T(x Ex+e"se5555555555555555555555555555555555555555 ?0<&eferre. T(x Asse!55555555555555555555555555555555555555 ?0<

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/19 $Co"!i"-e.'

$.'71< 719

I"come before i"come !(x :;;0 :8890I"come !(x ex+e"se

C-rre"! 78;097 7@8079F-!-re $be"efi!' ?0< $1<0?;'

  7;70;7 7<708<Ne! i"come :908 :@?101<

$e' Refer !o l(s! !4o col-m"s i" !(bles i" +(r! $(' (bo3e5

71< 719No"/c-rre"! (sse!s

&eferre. !(x (sse! :?80< :?;097Current liabilities

Deferred tax liability........... 26,680 24,030

Under ASPE, deferred tax assets and deferred tax liabilities aresegregated into current and non-current categories. Theclassification of an individual deferred tax liability or asset ascurrent or non-current is determined by the classification of theasset or liability underlying the specific temporary difference.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/19 $Co"!i"-e.'

$f' &i3i.e. b,

 Acco-"!i"#

7;= I"comeAcco-"!i"# i"come :;;0 :78;01? 7;5=

No"/.e.-c!ible .-es 110 ?01; 5?=

No"/.e.-c!ible i"!eres! @0 109 57=

  7;90@ 7;5<=C*("#e i" !(x r(!e $:19@0

  :8;0' [ $7;= 7=' <0 $1019' $51='

:7;70;7 7;59=

Effec!i3e !(x r(!e $:7;70;7>:;;0' 7;59=

The effective tax rate differs from the statutory rate because ofthe effect of the permanent differences of golf club dues andinterest, and because of the effect of the change in tax rateduring the year on the deferred tax accounts.

(g)

The responses to (a) to (f) would not change in amount, althoughdifferent terminology might be used (that is, IFRS would tend touse the terms deferred, while ASPE preparers might use theterms related to future taxes). The only calculation differenceswould be related to the classification of the deferred accounts onthe statement of financial position. Under IFRS, these would be:

71< 719No"/c-rre"! (sse!s

&eferre. !(x (sse! :1108; :1<0?;

$:?;097 :790? :1<0?;' $:?80< :7@0@8 :1108;'

IFRS require that all deferred tax assets and liabilities bereported as non-current items on a classified statement offinancial position.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth Canadian Edition

PROBLEM 18-15

Prior ,e(r !(x r(!e) :@1@0 > :7070 78=

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

  &eferre. T(x If $ASPE'C-rre"!

Acco-"! T(x C(rr,i"# Tem+or(r, T(x Asse! Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

PPDE before c*("#ei" !(x r(!e

$:7070' 78= $:@1@0' LT

I"cre(se i" .eferre. !(x li(bili!, .-e !o c*("#e i" !(x r(!e$:7070 X 7='0 (". .eferre. !(x ex+e"se (.6-s!me"! $990'&eferre. !(x li(bili!, $rel(!e. !o PPDE'0 &ec5 ?1>19 $:@@0'

"o! +ro3i.e. "o c*("#e i" (mo-"! of PPDE !em+or(r, .iffere"ce si"ce &ec5 ?1>1?

S!(!eme"! of Fi"("ci(l Posi!io"

  &e.-c!ible$T(x(ble'

  &eferre. T(x If $ASPE'C-rre"!

Acco-"!T(x

C(rr,i"# Tem+or(r, T(x Asse! Lo"#/

&ec5 ?10 719 B(se Amo-"! &iffere"ces R(!e $Li(bili!,' Term

PPDE $:7070' ?= $:@@0' LT

Pe"sio" li(bili!, $790' ?= $07' LT

(rr("!, li(bili!, ?10 ?= ;0? C

&eferre. !(x li(bili!,0 &ec5 ?1>19 $:@<0;'

&eferre. !(x li(bili!, before (.6-s!me"!&ecre(se $"e!' "ee.e. i" .eferre. !(x li(bili!,0 (". "e! .eferre. !(xbe"efi!

$ @@0'

: 701

:

"o! #i3e" i" !*e +roblem5

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PROBLEM 18/1< $Co"!i"-e.'

C(lc-l(!io" of loss for !(x +-r+oses (". loss c(rr,for4(r.)

Acco-"!i"# loss $:9;90'

Perm("e"! .iffere"ces)&e3elo+me"! cos!s $<= X :1<0' <0Me(ls (". e"!er!(i"me"! $<= X :?80' 1;0

Re3ersi"# .iffere"ces)(rr("!, ex+e"se ?10Pe"sio" f-".i"# ex+e"se $790'

Loss for i"come !(x +-r+oses $?;?0'C(rr,b(cQ !o +rior ,e(rs 17?0Loss (3(il(ble for c(rr,for4(r. $70'

<= re(li(!io" +rob(ble <=Por!io" of loss !o reco#"ie (s be"efi! $1?<0'T(x r(!e ?=&eferre. !(x (sse! (". c-rre"! be"efi! $:90<' $:80 :1110 :790'

719 I"come !(x 6o-r"(l e"!ries)

I"come T(x Recei3(ble $:17?0 x 78='5 ?9099C-rre"! T(x Be"efi! 555555555555555555555555555555555555 ?9099

&eferre. T(x Ex+e"se5 990&eferre. T(x Li(bili!, $i"cr5 i" !(x r(!e'55 990

Deferred Tax Liability …………………………. 2,100  Deferred Tax Benefit ……………………. 2,100

&eferre. T(x Li(bili!, $loss c(rr,for4(r.'55555555 90<&eferre. T(x Be"efi! $loss c(rr,for4(r.'5 5 90<

I"s!e(. of !*e !*ree .eferre. !(x e"!ries (bo3e0 o"e e"!r, co-l.*(3e bee" m(.e (s follo4s)

&eferre. T(x Ex+e"se 5555 109&eferre. T(x Li(bili!, 5 109$:990 / :701 / :90<'

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18-15 (Continued)

I"come s!(!eme"! $+(r!i(l'

Loss before i"come !(x $:9;90'I"come !(x be"efi! $ex+e"se'

C-rre"! loss c(rr,b(cQ :?9099&eferre. $109' ??09

Ne! i"come $loss' $:9@0;@'

$:90< :990 :;0? :07 :109'No!e !o !*e fi"("ci(l s!(!eme"!s) T*e .eferre. !(x ex+e"sei"cre(se. b, :990 .-e !o ( c*("#e i" !*e !(x r(!e i" 7195

Reco"cili(!io" S!(!-!or, r(!e !o effec!i3e r(!e)

 Z Acco-"!/

?= i"# loss

I"come before !(xes :9;90 :19807 ?5=No"/.e.-c!ible)  &e3elo+me"! cos!s <0 $770<' $95<<='

  Me(ls>e"!er!(i"me"! 1;0 $<0' $151<='

170 795?=T(x r(!e (.6-s!me"! o"re3ersi"# .iffere"ces$:7070 x 57' 7070 $990' $85;1=' of loss c(rr,for4(r.reco3er, "o! +rob(ble 1?<0 $90<' $857='T(x r(!e (.6-s!me"! o" lossc(rr,b(cQ $:17?0 x 57' 17?0 $709@' $5<='

:??09 @5@;=

Effec!i3e !(x r(!e $:??09 > :9;90 @5@;=' @5@;=

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

PROBLEM 18/1< $Co"!i"-e.'

^-irQ I"c5s effec!i3e !(x r(!e .iffers from !*e s!(!-!or, r(!e .-e !o+erm("e"! .iffere"ces !*(! 4ill "e3er be s-b6ec! !o !(x ( c*("#ei" !(x r(!e !*(! im+(c!s !em+or(r, .iffere"ces !*(! (re bei"#c(rrie. for4(r. "o! reco#"ii"# !*e .eferre. !(x be"efi! of *(lf of !*e loss c(rr,for4(r. (".0 reco3er, of +rior ,e(r i"come !(xes (!( !(x r(!e .iffere"! !*(" !*e c-rre"! ,e(r r(!e5

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CASES

No!e) See !*e C(se Primer o" !*e S!-.e"! 4ebsi!e0 (s 4ell (s !*e

S-mm(r, of !*e C(se Primer i" !*e fro"! of !*e !ex!5 No!e !*(! !*efirs! fe4 c*(+!ers i" 3ol-me 1 l(, !*e fo-".(!io" for fi"("ci(lre+or!i"# .ecisio" m(Qi"#5 

CA 18/1 BA]ER COMPANJ LIMITE&

7#er#ie'

2 Assume that BAA4 is a constraint since the financial statements are !eingaudited. As a "ri#ate com"any, the com"any could use A4E or I56 and

therefore differences 'ill !e identified.2 The role is that of com"any auditor and, therefore, the auditor 'ouldensure trans"arency.

2 Management has high e"ectations of the com"any@s a!ility to turn aroundand continue to gro'?and may !e !iased to sho' this.

2 sers include shareholders/in#estors 'ho 'ill 'ant trans"arent statements.Bi#en loss situation?they 'ill !e looking to decide 'hether to di#est or not.

 Analysis and 6ecommendations

Issue The issue is 'hether the !enefit from the losses should !e recogni9ed in

the current financial statements.

To the etent that taes 'ere "aid in "re#ious years, the losses 'ould first !ecarried !ack to reco#er these taes and a "artial !enefit could !e recogni9ed.

The real issue is 'hether there is sufficient certainty to recogni9e the !enefits thatmight !e reali9ed if the losses are carried for'ard. The !enefits may !erecogni9ed if it is more likely than not that the !enefits 'ill !e reali9ed =under 

 A4E> or "ro!a!le =under I56>. This ultimately de"ends on the eistence of sufficient taa!le income in the carryfor'ard "eriod to !e a!le to utili9e the lossand shelter future taa!le income. Dote that under A4E, the entity has a choice

to use the taes "aya!le method or future income taes method.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CA 18/1 $Co"!i"-e.'

6ecogni9e !enefit of losses &o not2 7n the one hand, management

has !ig "lans to e"and intone' markets 'ith ne' "roducts.T'o ne' "roducts arescheduled to !e introduced andthere are sufficient customerslined u" to "urchase the"roducts, such that the com"anyis "redicting at least a !reake#en situation usingconser#ati#e estimates.

2 The fact that the com"any did

not suffer "re2recession lossesin its first t'o years is a signalthat they must !e doingsomething right. With res"ect tothe economists, it might !eargued that no one can really"redict the future. Managementhas !etter insight into its o'ncom"any and customers and,therefore, might !e in a !etter"osition to "redict the future.

2 The fact that numerouscom"etitors ha#e gone under'ill ho"efully o"en u" ne'markets and hel" increasemarket share.

2 In addition, this o"tion 'ould not!e allo'a!le under the taes"aya!le method =A4E>.

2 5orming a conclusion that the

!enefits are likely to !e reali9edis difficult 'hen certainunfa#oura!le e#idence eists.

2 In this case, unfa#oura!lee#idence 'ould include the factthat there is a history of marginal"rofits only =and, of course, theloss> and the fact that thiscom"any is still in its formati#eyears. It is not unusual forcom"anies to sustain losses in

the start2u" "eriod.2 5urthermore, it might !e argued

that the current state of theeconomy is unsettled.nem"loyment is still high andconsumer s"ending has still notincreased significantly. The factthat economists are "redictingthat it might take t'o to threemore years for consumers"ending to reco#er results in

more uncertainty.2 In addition, if using the taes

"aya!le method =A4E>, 'ouldonly recogni9e taes recei#a!les!ased on current and/or refiledta returns. Therefore no taassets 'ould !e recorded inad#ance.

In conclusion, although management might !e a!le to make a strong case for "rofita!ility, it is still a "ro8ection at !est and, gi#en that the economy still a""earsto !e slo', it might !e more conser#ati#e not to recogni9e the !enefit. This is inkee"ing 'ith the role of auditor. The unrecogni9ed !enefits and e"iry dates'ould !e note disclosed.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CA 18/7 CRINGLE INC5 $CI'

7#er#ie'

- 6ole controller "otential !ias to'ards making com"any look !etter since looking for ne' ca"ital and to "otentially refinance loan.

- Fank and "otential in#estors are key users 'ho 'ill !e relying onstatements to make decisions need trans"arency.

- 4u!lic com"any since shares trade on T< I56 is a constraint.- 5or in#estments, com"any must decide 'hether to follo' I56 - =early

ado"t> or IA (-.

Analysis and recommendations

Issue In#estment in common shares

E;uity method At fair #alue 'ith gains and lossesthrough income or 7CI

- %G 2 !orderline for significantinfluence.

- 6e"resentation on Foard =1/$>may allo' influence.

- 7riginal intent 'as for strategic"ur"oses.

- %G inconclusi#e.- Do longer !eing held for

strategic "ur"oses i.e. intent tosell/trade is share "rices risea!o#e certain "oint.

- If 537CI re#alue to fair #alueand gains/losses to 7CI =iffollo'ing I56 - must elect>.

- If 53T40 =H5T> re#alue to fair#alue and gains/losses to netincome.

- 7"tion to treat as either =53T40and/or 537CI> under IA (- orI56 -.

6ecommendations

Could select any of the o"tions ho'e#er, gi#en the intent to sell if the sharesreach a certain "rice, consider measuring at fair #alue 'ith gains/losses throughincome =easier>. This o"tion is a#aila!le under I56 - and IA (-.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CA 18/7 $Co"!i"-e.'

Issue In#estment in !onds

 Amorti9ed cost 5air #alue ='ith gains/losses !ooked toincome>

- nder IA (- 2 Intent to hold tomaturity e"ressed and a!ility tohold gi#en ne' "otential influ of cash =raising ca"ital>.

-  Amorti9ed cost amorti9e"remium as an ad8ustment tointerest cost.

- nder IA (- may ha#e tosegregate the con#ersion o"tion

and #alue at fair #alue=em!edded deri#ati#e>. DF. Thisis generally !eyond the sco"e of the tet.

- nder I56 - use amorti9edcost only if com"any managescash flo's on the !asis of yieldto maturity and contractual cashflo's include "rinci"al andinterest. In this case it is notclear that the entire !usinessmodel includes managing de!tinstruments on a yield to

maturity !asis and thus this'ould not !e #alued atamorti9ed cost.

- In addition, since these are de!tinstruments, the o"tion to #alueat 537CI is not a#aila!le underI56 -. I56 - only allo's thiso"tion for e;uity instruments.

- nder IA (- if classified asHTM =amorti9ed cost> and sell"rior to maturity, it may in#oke

tainting "ro#isions =if significant>.If this is the case, 'ould nolonger !e a!le to #alue this andother de!t securities atamorti9ed costs. Therefore donot measure at amorti9ed costu"front and a#oid risk of tainting.

- More trans"arent to #alue at53T40 since !usiness modelseems to indicate thein#estments are incidental to

main !usiness.

6ecommendations

 To #alue at fair #alue 'ith gains/losses through income.

olutions Manual 121+) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CA 18/7 $Co"!i"-e.'

Issue 6e#enue recognition Don2refunda!le fees

6ecogni9e u"front fee &o not- Multi"le element arrangement- 4ro"rietary info considered

se"ara!le unit transfera!le "ercom"any and therefore must ha#estandalone #alue.

- 7!8ecti#e and relia!le e#idence ofundeli#ered item since issuedrene'al contracts to others thisyear.

- 4ersuasi#e e#idence of contract

since deal is done and likelydocumented.

- Measura!le since no materialuncertainties.

- &eli#ery of "ro"rietary info alreadyoccurred.

- Would ha#e to !ifurcate.

- 4ro"rietary info may not !etransfera!le se"arately andtherefore considered an integral"art of the 'hole transaction =hasno #alue other'ise if nottransferra!le>.

- 6ecogni9e o#er time straight lineunless other "attern.

- May use "ercentage of com"letionmethod.

6ecommendations

To recogni9e entire contract amount o#er time as more reflecti#e of the !undled

nature of the transaction.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

CA 18/7 $Co"!i"-e.'

Issue Hedging

Hedge accounting discussion oftheory as re;uested !y client

Do hedge accounting

-  Meant to ensure that gains/lossesfrom hedged items offsetgains/losses from hedging items inincome in same "eriod.

- Must use if do not already do so.- Modifies normal accounting.- Must I& hedging relationshi"

!et'een hedged and hedging item- Must ensure effecti#e.

- 7"tional.- Costs and com"leity are

significant.- Do need to use hedge accounting

since gains and losses of hedged= A6> and hedging items=for'ard contract> alreadyessentially offset =for'ard contractrecogni9ed, #alued at fair #alue and

gains/losses to net income already. A6 re#alued to s"ot rate 'ithgains and losses to net income>.

- Datural hedge does not re;uires"ecial accounting since A4also re#alued to s"ot rate 'ithgains/losses to income.

6ecommendations

There is no need to use hedge accounting. 6isk that counter"arties 'ill fail to

com"lete transaction for'ard contract 'ould mean still e"osed to risk.

Issue 6ecogni9e !enefit of 0C5

Yes Do- &ue to a one2time loss.- 7ther'ise e"ected to !e

"rofita!le.

2 Dot sure if com"any 'ill !e "rofita!lenet year.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

TIME AN& P%RPOSE OF RITING ASSIGNMENTS

WA 121 =Time %%) minutes>

4ur"ose?to ha#e the student e"lain the o!8ecti#es 'hen accounting for incometaes in the financial statements and the !asic "rinci"les that are a""lied inmeeting the o!8ecti#es. The student is re;uired to use the conce"tual frame'orkand the current definitions of assets and lia!ilities to e"lain the recognition of future ta accounts on the !alance sheet.

WA 12% =Time %%) minutes>

4ur"ose?to de#elo" an understanding of !oth re#ersing and "ermanentdifferences. The student is re;uired to e"lain the nature of eight differences and

to e"lain 'hy each is a "ermanent or re#ersing difference. Also, the nature of and the classification of future ta accounts are eamined along 'ith differencesunder I56 and A4E.

WA 12( =Time %%) minutes>

4ur"ose?to de#elo" an understanding of future income taes resulting from thedifferences, 'hich eist !et'een taa!le income and "re2ta accounting income.This case in#ol#es a list of items, each of 'hich the student is re;uired to identifyas either a tem"orary difference or a "ermanent difference. Additionally, thestudent must decide, for each tem"orary difference, 'hether it 'ill result in future

taa!le or deducti!le amounts and 'hether it 'ill usually gi#e rise to a futureincome ta lia!ility or future income ta asset. &ifferences !et'een A4E andI56 are also highlighted.

WA 12$ =Time 1)% minutes>

4ur"ose?to "ro#ide the student 'ith an ethics case for 'hich to conclude

'hether or not a !usiness is rightfully deferring income taes !y managing the

re#ersing of ac;uisitions and dis"osals of "ro"erty, "lant, and e;ui"ment.

WA 12) =Time 1)% minutes>

4ur"ose?to de#elo" an understanding of future taes and !alance sheetdisclosure. The student must demonstrate an understanding of ho' to determinethe a""ro"riate ta rate to use in com"uting future taes 'hen different ta ratesare enacted for #arious years affected !y eisting tem"orary differences. 

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

TIME AN& P%RPOSE OF RITING ASSIGNMENTS$Co"!i"-e.'

WA 12* =Time %%) minutes>

4ur"ose?to de#elo" an understanding of s"ecific differences under I56 and A4E for re"orting su!se;uent future income ta differences resulting from a "rior "eriod ad8ustment, a re#aluation ad8ustment and an e;uity in#estment.

WA 12+ =Time %%) minutes>

4ur"ose?to assist students to understand the differences !et'een I56 and A4E for re"orting income taes and the conce"tual reasons for thesedifferences.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

SOL%TIONS TO RITING ASSIGNMENTS

A 18/1

=a> The follo'ing are o!8ecti#es in accounting for income taes1. To recogni9e the amount of taes "aya!le or refunda!le for the current

year.%. To recogni9e deferred/future income ta lia!ilities and assets for the

future ta conse;uences of e#ents that ha#e !een recogni9ed in thefinancial statements or ta returns.

=!> The follo'ing !asic "rinci"les are a""lied in accounting for income taes atthe date of the financial statements1. A current income ta lia!ility or asset is recogni9ed for the estimated

taes "aya!le or refunda!le on the ta return for the current year.%. A deferred/future income ta lia!ility or asset is recogni9ed for the

estimated future ta effects attri!uta!le to tem"orary differences andcarry2for'ards using the enacted =or su!stantially enacted> ta rates.

(. The measurement of current and deferred/future ta lia!ilities andassets is !ased on "ro#isions of the enacted ta la'J the effects of future changes in ta la's or rates are not antici"ated.

$. If necessary, and !ased on a#aila!le e#idence, deferred/future incometa assets are ad8usted to remo#e ta !enefits that are not e"ected to!e reali9ed.

=c> nder the future income ta method =A4E> or the tem"orary differencea""roach =I56> of accounting for income taes, the deferred =or future>income ta outflo's and inflo's related to the reali9ation of assets and thesettlement of lia!ilities for their carrying amounts are recogni9ed as deferredta lia!ilities and deferred ta assets. =Dote 'e use the term deferred hereand !elo' for !oth I56 and A4E to sim"lify the discussion>

These deferred ta lia!ilities and deferred ta assets meet the conce"tualdefinitions of lia!ilities and assets. In other 'ords, tem"orary differences!et'een an asset or lia!ilitys carrying amount and its ta !ase, unused talosses, and income ta reductions may generate deferred !enefits in the

form of reduced ta "ayments in later "eriods. uch items 'ould !erecogni9ed as deferred ta assets 'hen the a""ro"riate criteria are met,since they satisfy the conce"tual definition of assets.

This method is considered to !e more effecti#e in achie#ing the o!8ecti#e of financial re"orting? communicating information that is useful to users?asthe method "ro#ides users 'ith information a!out a com"any@s economic

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/1 $Co"!i"-e.'

&oes this re"resent a re"resent an enforcea!le o!ligation The com"anydoes not yet o'e these taes. The amount of the deferred ta lia!ility 'ill

de"end on future taa!le "rofits, and 'hen these tem"orary differences 'illre#erse. 5or eam"le, if a com"any continues to in#est in "ro"erty, "lantand e;ui"ment and the ca"ital cost allo'ance claim is al'ays greater thanthe de"reciation for ta "ur"oses, then it may !e a long time = if e#er> thatthis lia!ility for "ayment 'ill arise Conse;uently, the o!ligation is not"resently enforcea!le. This lia!ility re"resents a Lconditional o!ligation to"ay, gi#en certain future e#ents occur. As descri!ed a!o#e, using ameasurement that considers the "ro!a!ility of different outcomes 'ouldlikely !etter reflect the amount of the future o!ligation.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/7

=a> 1. 6e#ersing difference. The full, estimated, three years of 'arranty costsreduce the current year@s "re2ta accounting income, !ut they 'illreduce taa!le income in #arying amounts each res"ecti#e year, as

"aid. Assuming the estimate as to each 'arranty is #alid, the totalamounts deducted for accounting and for ta "ur"oses 'ill !e e;ualo#er the three2year "eriod for a gi#en 'arranty. This is an eam"le of an e"ense that in the first "eriod reduces "re2ta accounting incomemore than taa!le income and in later years re#erses. This ty"e of tem2"orary difference 'ill result in future deducti!le amounts, 'hich 'ill gi#erise to the current recognition of a future income ta asset. Another 'ayto e#aluate this situation is to com"are the carrying #alue of the'arranty lia!ility 'ith its ta !asis ='hich is 9ero>. When the lia!ility issettled in a future year, an e"ense 'ill !e recogni9ed for ta "ur"oses!ut none 'ill !e recogni9ed for financial re"orting "ur"oses. Therefore,

ta !enefits for the ta deductions should result from the futuresettlement of the lia!ility.

%. 6e#ersing difference. While the change in #alue is included in incomein the current year, it 'ill not !e taa!le/deducti!le until sold. Therefore,it is a re#ersing difference.

(. 4ermanent difference. The difference is not due to different methods of de"reciation, !ut due to different amounts acce"ted as Lcost. inceonly the amount acce"ted originally as its ta cost can !e amorti9ed inthe future, the difference is a "ermanent one.

$. 4ermanent difference. The in#estor@s share of earnings of an in#esteeaccounted for !y the e;uity method is included in accounting income,'hile di#idends recei#ed from taa!le Canadian cor"orations areecluded from taa!le income. The amount included in accountingincome is a "ermanent difference deducted 'hen com"uting taa!leincome.

). 6e#ersing difference. The 'rite do'n in the in#entory is recogni9ed for accounting "ur"oses in the current year, !ut the loss is not allo'ed to!e deducted for ta "ur"oses until the in#entory is sold. Hence, it is a

re#ersing difference.

*. 4ermanent and re#ersing difference. Any loss from a litigation accrual'ould not !e deducti!le for ta "ur"oses until "aid. This is a re#ersingdifference arising in the year accrued. The "ortion of the loss that ise"ected to !e a "enalty, 'hich cannot !e used as a deducti!lee"ense for ta "ur"oses, 'ill !e a "ermanent difference.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/7 $Co"!i"-e.'

+. 6e#ersing difference under I56 only =A4E does not allo' there#aluation model to !e used>. This 'rite do'n for the "ro"erties 'illcause the deferred ta accounts to change, !ut the loss is not re"orted

for current ta "ur"oses. 7nce the land and !uildings are actuallydis"osed, the taa!le income 'ill !e im"acted !y difference !et'eenthe original cost and the "roceeds on dis"osal. =At this time, a "ortionof the difference may !e sho'n as reca"tured ca"ital cost allo'anceand a "ortion as ca"ital gains, !ut this 'ill not !e kno'n until the actualsale "roceeds are determined.>

. 6e#ersing difference When the retirement o!ligation is settled, the fullcash amount "aid 'ill !e reflected as a reduction of taa!le income.Ho'e#er, in the accounting records, this has !een re"orted each year since the o!ligation 'as originally accrued, along 'ith the gain on

settlement in the final year. As a result, there 'ill !e an amount indeferred ta lia!ilities 'ith res"ect to this o!ligation. When theo!ligation is "aid, this future ta lia!ility 'ill !e re#ersed, and the fullamount of taes no' o'ing 'ill !e recorded as income taes "aya!le.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/7 $Co"!i"-e.'

=!>

Deferred tax accounts

1. The estimated 'arranty costs 'ill !e deducti!le in future "eriodsand cause taa!le income to !e less than accounting income in thefuture.  &eferred ta asset =Classified as non2current, assuming the

three2year 'arranty lia!ility is classified as non2current lia!ility>under !oth I56 and A4E.

%. Holding/unreali9ed gains   'ill !e taa!le 'hen reali9ed

deferred ta lia!ility.

Holding/unreali9ed losses   'ill !e deducti!le 'hen reali9ed deferred ta asset.=imilar treatment under A4E and I56>.

(. Do related deferred ta accounts.

$. Do related deferred ta accounts.

). The im"airment loss 'ill !e deducti!le in future "eriods and causetaa!le income to !e less than accounting income in the future. &eferred ta asset =Classified as current under A4E and non2

current under I56>.

*. The "enalty "ortion does not ha#e related deferred ta accounts.The rest of it results in deferred ta asset. =Classified as current or non2current !ased on the e"ected re#ersal date under A4E andnon2current under I56>.

+. This is not allo'ed under A4E. nder I56, the loss 'ill !ededucti!le in future "eriods and cause taa!le income to !e lessthan accounting income in the future. &eferred ta asset =or a reduction in the related future ta lia!ility

account> =Classified as non2current under I56>.

. The cash settlement of the retirement o!ligation results in thecurrent taa!le income !eing lo'er than the current accountingincome. As such, there 'ill !e a reduction in the future ta assetaccount that had !een increasing in "re#ious years as the e"ense'as recorded for accounting "ur"oses !ut not yet for ta "ur"oses.The related future ta asset should !e eliminated 'ith thissettlement.

olutions Manual 121) Cha"ter 1

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/?

$(' $b' 1. 

%. 

(. 

$. ). 

*. 

+.

 

-.1.11.

1%.1(.

6e#ersing diff.6e#ersing diff.4ermanent diff.4ermanent diff.6e#ersing diff.6e#ersing diff.4ermanent diff.4ermanent diff.4ermanent diff.6e#ersing diff.6e#ersing diff.

6e#ersing diff.6e#ersing diff.

5uture deducti!le amounts5uture deducti!le amountsDo effect on future ta returnsDo effect on future ta returns5uture taa!le amounts5uture taa!le amountsDo effect on future ta returnsDo effect on future ta returnsDo effect on future ta returns5uture deducti!le amountsnreali9ed gains

future taa!le amountsHolding/unreali9ed losses

future deducti!le amounts5uture deducti!le amounts5uture taa!le amounts

&eferred ta asset&eferred ta assetDo deferred taesDo deferred taes&eferred ta lia!.&eferred ta lia!.Do deferred taesDo deferred taesDo deferred taes&eferred ta asset

&eferred ta lia!.

&eferred ta asset&eferred ta asset&eferred ta lia!.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/9

=a> Accelerated de"reciation, such as the dou!le declining !alance methodused for income ta "ur"oses, allo's a com"any to deduct su!stantialca"ital cost allo'ance early in the asset@s life. Yearly CCA declines to a

"oint 'here the accelerated CCA amount is lo'er than the de"reciatione"ense com"uted under the straight2line method. The re#ersing "ointoccurs 'hen the accelerated CCA matches the straight2line rate. omecom"anies are moti#ated to sell assets "rior to this "oint to maimi9e theCCA !enefit "ro#ided in terms of income taes. As long as the com"any isgro'ing, the com"any may recei#e a "rolonged deferral of income taes.

=!> The deferral of income taes means that, due to tem"orary differencescaused !y the difference in financial accounting "rinci"les and ta la's, acom"any 'ill !e a!le to defer "aying its income taes until future "eriods.The "ractice of selling2off assets !efore the differences re#erse means that

the com"any may "ay a lesser amount of taes to the go#ernment.

=c> hareholders 'ould !e harmed !y Mesa@s income ta "ractice. In order tomaintain this "olicy, and using the mechanism descri!ed in =a> a!o#e, thecom"any has to systematically ac;uire ne' assets at a cost higher thanthe "re#iously dis"osed assets. To re"urchase assets at a lo'er cost couldalso trigger reca"tured CCA in some cases. This means that managementis "ro!a!ly em!arking on a short2term "olicy of im"ro#ing its financial"icture at the cost of a damaging cash management "olicy, or it is inde!tingitself. 7ne 'ould also ha#e to ;uestion 'hether there is a legitimate needfor these ne' assets. This 'ould !e demonstrated !y a decrease in theeffecti#eness of their use of assets in declining return2of2assets or asset2turno#er ratios.

=d> As an ethical accountant, Henrietta is o!ligated to u"hold o!8ecti#ity andintegrity in the "ractice of financial re"orting. If she thinks that this "racticeis unethical, then she needs to communicate her concerns to the highestle#els of management 'ithin Mesa, including mem!ers of the Foard and/or the Audit Committee. Ho'e#er, it 'ould a""ear here that Mesa is sim"lytrying to minimi9e its income taes, 'hich "ro!a!ly 'ould not !econsidered unethical.Current ta legislation "ermits ta"ayers to arrange their affairs in order to"ay the minimum amount of ta?'hen it is done 'ithin ta rules. Ho'e#er,transactions 'hose sole "ur"ose is to a#oid "aying income taes and ha#eno !ona fide !usiness "ur"ose can !e caught under BAA6 =Beneral anti2a#oidance rules>. These transactions, if caught, could !e re2assessed !yCanada 6e#enue Agency.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/<

$('=1> The ()G ta rate 'ould !e used in calculating the deferred ta lia!ility at

&ecem!er (1, %1$, if a net o"erating loss e"ected in %1) is to !e carried

!ack to %1$ =the enacted ta rate is ()G in %1$>. =ee discussion !elo'.>

=%> The (G ta rate 'ould !e used in calculating the deferred ta lia!ility at&ecem!er (1,%1$, if taa!le income is e"ected in %1) =the ta rateenacted for %1) is (G and %1) is the year in 'hich the future taa!leamount is e"ected to occur>. =ee discussion !elo'.>

=(> The %$G ta rate 'ould !e used in calculating the deferred ta lia!ility at&ecem!er (1, %1$, if a net o"erating loss e"ected in %1) is to !e carriedfor'ard to %1* =the ta rate enacted for %1* is %$G>. =ee discussion!elo'.>

&isc-ssio")

In determining the future ta conse;uences of tem"orary differences, it is hel"fulto "re"are a schedule that sho's in 'hich future years eisting tem"orarydifferences 'ill result in taa!le or deducti!le amounts. The a""ro"riate enactedta rate is a""lied to these future taa!le and deducti!le amounts. In determiningthe a""ro"riate ta rate, you must make assum"tions a!out 'hether the entity 'illre"ort taa!le income or losses in the #arious future years e"ected to !e affected!y the re#ersal of eisting tem"orary differences. o, you calculate the taes"aya!le or refunda!le in the future due to eisting tem"orary differences. In

making these calculations, you a""ly the "ro#isions of the ta la's and enactedta rates for the rele#ant "eriods.

5or future taa!le amounts1. If taa!le income is e"ected in the year that a future taa!le amount is

scheduled, use the enacted rate for that future year to calculate the relateddeferred ta lia!ility.

%. If an o"erating loss is e"ected in the year that a future taa!le amount isscheduled, use the enacted rate of 'hat 'ould !e the "rior year that theo"erating loss 'ould !e carried !ack to =or the enacted rate of the futureyear to 'hich the carryfor'ard 'ould a""ly, 'hiche#er is a""ro"riate>, to

calculate the related deferred ta lia!ility.

5or future deducti!le amounts1. If taa!le income is e"ected in the year that a future deducti!le amount is

scheduled, use the enacted rate for that future year to calculate the relateddeferred ta asset.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

A 18/< $Co"!i"-e.'

%. If an o"erating loss is e"ected in the year that a future deducti!le amount isscheduled, use the enacted rate of 'hat 'ould !e the "rior year that theo"erating loss 'ould !e carried !ack to =or the enacted rate of the future

year to 'hich the carryfor'ard 'ould a""ly, 'hiche#er is a""ro"riate>, tocalculate the related deferred ta asset.

$b'=1> Assuming that the com"any 'ill reco#er the asset #alue through use, thecom"any 'ill generate taa!le income of N million, !ut only !e a!le to deductCCA of N(,),. Conse;uently, a tem"orary taa!le difference !et'een thecurrent carrying #alue and the ta #alue is N,, minus N(,), 'hich isN$,),. At a ta rate of (G, a deferred ta lia!ility of N1,(), 'ill !ere"orted. As the gain on this fair #alue ad8ustment is re"orted in net income, anychange in the deferred ta lia!ility account re;uired to re"ort a total amount of 

N1,(), 'ould also !e re"orted in net income.=%> If the com"any e"ects to reco#er the #alue of the asset through a sale in thenet year, the "roceeds on this sale 'ill attract different income ta rates. Thedeferred ta lia!ility should !e calculated !ased on the a""lica!le ta rates to !e"aid. Bi#en the a!o#e information, the deferred ta lia!ility is calculated asfollo'sN1,), 'ill !e reca"tured and taed at (G O N$),N(,, 'ill !e taed as ca"ital gains and attract a ta rate of 1)G =as gi#en inthe ;uestion> O N$),Total deferred ta lia!ility 'ill !e N-, =O N$), P N$),>.

 Any change re;uired to ad8ust the deferred ta lia!ility 'ill !e re"orted in net

income, as the fair #alue ad8ustment 'as re"orted in net income.

$c'  If this "ro"erty 'as measured using the re#aluation method, the samenum!ers 'ould a""ly as calculated a!o#e. Ho'e#er, changes re;uired to ad8ustthe deferred ta lia!ility account 'ill !e reflected in other com"rehensi#e income,since the re#aluation ad8ustment 'as re"orted #ia the other com"rehensi#eincome account.

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A 18/@

=1> An ad8ustment of N(, QN1 million < =%G %)G>R is re;uired to increasethe deferred ta lia!ility. Ho'e#er, there is a difference in ho' the offsetting

amount to this entry is recorded under I56 and A4E. nder I56, using!ack'ard tracing, as the error correction 'as originally recorded in retainedearnings, then the related income ta im"act of N(, must also !e recordedagainst retained earnings. In contrast, under A4E, the offsetting ad8ustment'ould !e "osted through the current net income.

=%> nder A4E, the assets are not re#alued, =ece"t one time on transition 'hichis !eing ignored as "art of this ;uestion>. Conse;uently, under A4E, thecom"any 'ill not increase the #alue of the "ro"erty to its fair #alue. nder I56,the com"any has the o"tion to ado"t the re#aluation method. sing there#aluation method, the increase in the fair #alue of N(.) million =1 million less

N*.) million> is re"orted as a re#aluation sur"lus. There is no' a total tem"orarydifference of N$.( million !et'een the accounting #alue =N1 million> and the ta#alue N).+ million =N million N%.( million> of the asset. The related ta im"act'ould !e to increase the deferred ta lia!ility !y N-, =N(.) million < %G>and the offsetting entry 'ould !e to other com"rehensi#e income. The totaldeferred ta lia!ility related to this asset 'ould no' !e N1,%$, =1 million 2N).+ million < %G>. This 'ould ha#e !een recorded as follo's

In "re#ious years =N*.) million N).+ million> < %G O N%%$,This year@s ad8ustment N-,Total deferred ta lia!ility N1,%$,

=(> nder A4E, the com"any has the o"tion to re"ort this e;uity in#estment atfair market #alue through net income or at cost. The com"any also has the o"tionto use the taes "aya!le method or the future income ta method for re"ortingincome taes. Felo', these different com!inations of alternati#es are eamined

i. E;uity in#estment at cost and taes "aya!le method is used In this case,there is no im"act on the income taes for the com"any. ince 0B hasnot sold the in#estment, there are no taes to !e "aid. In addition, sincethe in#estment has not !een re#alued, there is no im"act on the accountingincome for the year ended &ecem!er (1, %1). The ta #alue and the

accounting #alue of the asset are the same, and there are no re#ersingdifferences to recogni9e.ii. E;uity in#estment at cost and the future income ta method is used for 

taes. nder these methods, the in#estment carrying #alue remains atN($,, and no increase in #alue is re"orted in the net income. Also,since the gain is only re"orted for ta "ur"oses 'hen reali9ed, there is noim"act on taes "aya!le. As a result, the ta #alue and accounting #alue

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A 18/@ $Co"!i"-e.'

of the asset are the same at N($,, and there is no deferred ta lia!ility.iii. E;uity in#estment is ad8usted to fair #alue, and the com"any uses the taes

"aya!le method. In this case, the asset 'ould !e increased to N)1,,

and the resulting holding gain of N1+, =N)1, N($,> 'ould !ere"orted in net income. Ho'e#er, since the com"any has chosen to follo'the taes "aya!le method, only the actual amount of taes due is recordedas an e"ense 'hich is not im"acted !y unreali9ed holding gains. There isno future income ta lia!ility that must !e re"orted e#en though there is adifference !et'een the ta #alue and the accounting #alue of thein#estment.

i#. E;uity in#estment is ad8usted to fair #alue and the future income ta methodis used. In this case, the asset 'ould !e increased to N)1,, and theresulting unreali9ed gain of N1+, =N)1, N($,> 'ould !ere"orted in net income. The ta #alue of the in#estment is N($,, the

accounting #alue is N)1,, and therefore there is a tem"orary differenceof N1+,. At a ta rate of %G, the future taes lia!ility account 'ould!e increased !y N$+,* =N1+, < %G>. This ta im"act 'ould also !ere"orted in net income.

nder I56, the com"any must re"ort the in#estment at fair #alue, since the

in#estment does not ha#e contractual cash flo's. The com"any must re"ort

this in#estment as 53 through DI since it is held for trading. In this case, the

accounting is eactly the same as =i#> a!o#e

In this case, the asset 'ould !e increased to N)1,, and the resulting

unreali9ed gain of N1+, =N)1, N($,> 'ould !e re"orted innet income. The ta #alue of the in#estment is N($,, the accounting

#alue is N)1,, and therefore there is a tem"orary difference of 

N1+,. At a ta rate of %G, the deferred ta lia!ility account 'ould !e

increased !y N$+,* =N1+, < %G>. This ta im"act 'ould also !e

re"orted in net income.

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A 18/

There are many differences !et'een I56 and A4E 'ith res"ect tomeasurement and re"orting for income taes. 4rimarily, A4E has !een

'ritten to kee" recognition and measurement issues sim"le and thereforere;uiring less cost and time to calculate and re"ort. This conce"t isreflected in "ri#ate enter"rises ha#ing a choice of using either the taes"aya!le method or the future income taes method. The taes "aya!lemethod is definitely much sim"ler since tem"orary differences do not ha#eto !e measured, and only the actual amount of taes "aya!le needs to !ere"orted as an e"ense. Ho'e#er, "ri#ate enter"rises can also choose toado"t the future income taes method, 'hich is similar to the I56 method.5inally, there are differences in disclosure. Bi#en that "ri#ate enter"risere"orts ha#e a limited num!er of users 'ho are "rimarily creditors, thendisclosure is sim"lified in com"arison to I56.

These differences are highlighted !elo'• There is a difference in terminology A4E has retained terms used

in "ractice in Canada for many years, including accounting income=accounting profit  under I56>, future income taxes  =deferred taxesunder I56>, tax benefit   =tax income  under I56> and taxableincome =taxable profit  under I56>.

• With res"ect to the accounting for loss carryfor'ards, A4E re;uiresan assessment as to 'hether the loss is Lmore likely than not goingto result in a !enefit. =Again, this results from the "ractice that has!een used in Canada for many years.> I56 uses the assessment of L"ro!a!le i.e., is it "ro!a!le that the loss carryfor'ards 'ill result in

a !enefit. It is generally agreed that the terms ha#e the samemeaning and that the losses re"orted as !enefits 'ould !e the sameunder !oth definitions. 7ne difference is that A4E allo's fullrecognition of all future income ta assets arising from losses andtem"orary differences, and then a #aluation allo'ance can !e usedto ad8ust these future ta assets to the amount more likely than notto !e reali9ed. nder I56, there is no #aluation allo'ance that can!e recorded, !ut the com"any is re;uired to record the "ro!a!leamount of deferred ta assets to !e reali9ed.

• nder I56, !ack'ard tracing is re;uired for ad8ustment to deferredtaes 'here the original transactions 'ere "osted directly to e;uity,

either through 7CI or retained earnings. This is not re;uired under  A4E. The reason for the difference is due to generally acce"tedCanadian "ractice. It is likely that this 'ill e#entually change under I56, to !e similar to the A4E re;uirements.

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A 18/ $Co"!i"-e.'

• nder A4E, future ta accounts can !e classified as current or non2current, !ased on either the underlying asset or lia!ility, or on

the e"ected time of re#ersal. nder I56, only non2currentclassification is a#aila!le. Again, A4E is !ased on "ast "racticeacce"ted in Canada, and it is likely that I56 'ill e#entually ado"tthis classification 'ith future changes to IA 1%.

• nder A4E, intra"eriod ta allocation is only !et'een discontinuedand continued o"erations and e;uity items. I56 'ould also ha#eincome taes allocated to other com"rehensi#e income items, 'hichare not used under A4E.

• 5inally, the disclosure list is ;uite etensi#e under I56, and muchmore limited under A4E. Benerally A4E only re;uires disclosureon ta rates =if using the taes "aya!le method> and loss carryfor'ards. I56 re;uires disclosure to include reconciliations of thedeferred ta accounts and the income ta accounts and calculationof rates, 8ust to name a fe'.

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

RESEARCH AN& FINANCIAL ANALJSIS

RA18/1 STORA ENSO OJW5This 'as taken from the financial statements of tora Enso 7y8 for the year ended&ecem!er (1, %11. =All amounts in millions of euros.>

=a> Falance heet millions of E6&eferred taes =non2current asset> 1%1.-Ta recei#a!les =current asset> *.%&eferred taes =long2term lia!ility> $1.Ta lia!ilities =current lia!ility> +(.)

nder I56, deferred taes can only !e classified as non2current. Thedeferred ta asset re"resents the e"ected amount of the reduction in theamount of the taes that 'ill !e "aid in the future 'hen the tem"orarydifferences gi#ing rise to future deducti!le amounts re#erse. The deferredta lia!ility re"resents the amount of the taes that are e"ected to !e "aidin the future 'hen the tem"orary differences gi#ing rise to future taa!leamounts re#erse. The ta lia!ilities account re"resents the amount stillo'ing to the go#ernment as of &ecem!er (1, %11, and the ta recei#a!leaccount re"resents o#er"ayment of taes and still recei#a!le as a refundfrom the go#ernment as of &ecem!er (1, %11.

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RA18/1 $Co"!i"-e.'

=!> =5rom Dote ->&eferred ta assets

=in millions of E6>

5ied assets 2)%1.5inancial Instruments $.1ntaed "ro#isions 2$1.4ensions and "ro#isions +).Ta losses and ta credits carried for'ard 1-*.7ther deferred ta +.Total 2%+-.1

ho'n on statement of financial "ositions as

 Assets 1%1.-

0ia!ilities 2$1.

The fied asset de"reciation is included in the deferred ta lia!ilities account sinceit is a large "e#(!i3e !alance. It is common for com"anies to deduct more tade"reciation than BAA4 de"reciation, resulting in significant amounts that 'ill !etaa!le in the future. The "ension "ro#isions and o!*er  "ro#isions along 'ith theta loss carryfor'ards are included in deferred ta assets. All of these re"resentfuture deductions that might !e a#aila!le to the com"any to reduce future taes"aya!le.

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RA18/1 $Co"!i"-e.'

=c> In millions of E6 =5rom Dote ->

&eferred Ta

Falance :an 1, %11 2(11.*

Translation &ifferences 21.

Com"anies ac;uired/dis"osals 2(.-

7CI $.

Income statement continuing o"erations 2%.*

Falance &ecem!er (1, %11 2%+-.1

The largest ad8ustments are the 7CI ad8ustment for deferred taes, and thead8ustment for in#estments.

=d> As discussed in Dote -, the com"any has recogni9ed ta !enefits related togross losses carried for'ard in the amount of E6 1,$* million.

tora Enso has the follo'ing gross losses a#aila!le for carry for'ard

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RA18/1 $Co"!i"-e.'

millions of E6 E"iry date

-1 Do e"iry date

%% %11 %1*

-(( %1* and later  

Total 1,$*

=e> tora Enso has allocated ta 'ithin the "eriod to continuing o"erations,7CI items, "ensions and "ro#isions, financial instruments and e;uityhedging.

=f> The actual amount of income taes "aid 'as E61%-.1million. This 'asdisclosed on the cash flo' statement as an o"erating cash outflo' .

=g> As found in Dote -, the statutory ta rate for tora Enso 'as %%.-G in%11, and %(.(G in %1. The effecti#e ta rates 'ere 1.+G in %11,and 1(.1G in %1. . The ma8or causes of the differences !et'een thestatutory and effecti#e ta rates and the amounts are "resented !elo'.

711 71

4rofit !efore Ta $%.- ).(Ta at statutory rates a""lica!le to "rofits in the countryconcerned

2-*.$ 2%*.)

Don2deducti!le e"enses and ta eem"t income 1). 1.(

3aluation of deferred ta assets 2(.$ )1.+

Taes from "rior years -.+ -.(

Changes in ta rates and ta la's 2$.* 2.1

4rofits from e;uity accounted in#estments (1.$ %(.+

7ther  2(.$ $.*

Total Ta 2+.+ 211*.

Effecti#e Ta 6ate 1.+G 1(.1G

tatutory Ta 6ate %%.-G %(.(G

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RA18-2 GIL&AN ACTIEEAR INC5

=a> The amount of the income ta e"ense =reco#ery> for %1% 'as a reco#eryof N$,((+, and for %11 a reco#ery of N1-,%%(,. Thecom"any used intra"eriod ta allocation relating to its 7CI items =see Dote1* =d>, !ut the amounts allocated to income taes on 7CI items 'ere small.There are no amounts of income taes "aya!le for each fiscal year, !utthere 'as an amount recei#a!le of N()(, at the end of fiscal %1%=%11 O N)1),>. The com"any re"orts a change in non2cash 'orkingca"ital !alances relating to income taes recei#a!le for the %1% and %11years of inflo' =outflo'> N%,$$, and =N),($1,>, res"ecti#ely.This information 'as found in the o"erating acti#ities section of thestatement of cash flo's. 5urther information is found in note %( =a>.

=!> The statutory ta rates and effecti#e ta rates for %1% and %11 are"resented !elo'. There are significant differences !et'een the rates in!oth years.

=N in thousands >717 711

Income taes at a""lica!le statrate N(-,%$* N*1,-16eduction due to different tarates in foreign su!sidiaries =)1,*$> N=(,%+*>

Income ta =reco#ery> charge for"rior years@ taation -+$ =$1(>Effect of non2deducti!le e"ensesand other 1,1+( =+>Don2recognition of ta !enefitsrelated to ta losses and tem" diff ),-1 %,)+%Total income ta reco#ery =$,((+> =1-,%%(>

Canadian tatutory rate %+.%G %.GEffecti#e Ta 6ate =reco#ery> =(.G> =.-G>

The Com"any@s a""lica!le statutory rate is the Canadian com!ined rate

a""lica!le in 8urisdictions in 'hich the Com"any o"erates. The decrease instatutory ta rate is mainly due to the reduction of the Canadian 5ederal incometa rate a""lica!le to the Com"any effecti#e :an 1, %1% from 1*.)G to 1)G=Dote %>.The single most significant cause of the effecti#e rate !eing so much lo'er thanthe Canadian statutory rate in each year is the effect of su!sidiaries o"erating incountries 'ith much lo'er ta rates. It a""ears that there ha#e !een #ery

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RA18/7 $Co"!i"-e.'

significant refunds or other ta !enefits that ha#e !een recogni9ed in each year inthose other countries.

=c> A schedule of the deferred ta !alances re"orted on the %1% 54, along'ith their causes and the related asset or lia!ility 'ith different ta and!ook #alues is re"orted !elo'. nder I56 all deferred ta !alances onthe 54 are considered non2current. nder A4E, it 'ould !e !ased onthe classification of the related asset or lia!ility. Where there is no relatedasset or lia!ility, the classification of the ta !alance 'ould !e !ased on'hen the related tem"orary difference 'as e"ected to re#erse.

 Amounts in thousands of N

nderlying item Amount 54 item

&eferred Ta AssetsDon ca"ital losses **,(* D/A for loss carry for'ards

6eser#es and accruals %+,$) Do details gi#en7ther -,()+ Do details gi#ennrecogni9ed deferredta assets

=1%,)(>

&eferred Ta 0ia!ilities4ro"erty, "lant, and e;ui"Intangi!le assets

=1->=+,)()>

44SE and intangi!le accounts44SE and intangi!le accounts

Total(,(+1

This net !alance has !een classified in Don2current assets N (,(+1thousand. There are no current deferred ta accounts.

  =d> Bildan as of e"t (, %1% has ta credits, ca"ital and non2ca"ital losscarryfor'ards and other taa!le tem"orary differences a#aila!le to reduce futuretaa!le income for ta "ur"oses re"resenting a ta !enefit of a""roimately N1%.1million, for 'hich no deferred ta asset has !een recogni9ed. The ta credits andca"ital and non2ca"ital loss carryfor'ards e"ire !et'een %1- and %(%. =Dote%>

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

RA18/? COMPARATIE ANALJSIS

=a> All three com"anies o"erate in the retail food industry. 0o!la' and Em"ireo"erate grocery stores in Canada and Alimentation Couche2Tard

=LAlimentation> o"erates con#enience stores in Dorth America.

=!> A schedule of the total income ta "ro#ision for each com"any for %1%=%11 for 0o!la'> is "resented !elo'.

=millions of N> Alime"!(!io" Lobl(4 Em+ire

Total incometa "ro#ision N1$*.( C&DN %1). C&DN1%%.(

 A schedule of the total income ta "ro#ision for each com"any is "resented

!elo'. All three com"anies included income ta "ro#isions in current netearnings and other com"rehensi#e income items. 0o!la' also had a "rior "eriod ad8ustment 'hich included an income ta ad8ustment.

=in millions of N>Alime"!(!io"

%S:Lobl(4CA&:

Em+ireCA&:

Total ta "ro#ision sho'n instatement of earnings 1$*.( %1). 1%%.(Ta "ro#ision in othercom"rehensi#e income =i> 2*. 2. 21$.

   Total income ta "ro#ision 1(-.) %+. 1.(

=i> Dote this 'as totaled from each of the 7CI items found either in thenotes or on the statement of com"rehensi#e income. 5or 0o!la' #ie' "age$ of Annual 6e"ort.

=c> A schedule of the com"anies@ deferred income ta assets and lia!ilities asat the most recent !alance sheet date, along 'ith the underlying tem"orarydifferences, is "resented !elo'. 7ne 'ould e"ect com"anies in the sameindustry to ha#e similar tem"orary differences and these three com"aniesdo ha#e some tem"orary differences in common. Although the com"aniesuse different 'ording to descri!e the underlying tem"orary differences andre"ort in #arying degrees of detail, there are some similarities es"ecially'ith "ro"erty, "lant and e;ui"ment and good'ill and intangi!les.

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RA18/? $Co"!i"-e.'

=in millions of N>

Alime"!(!io"Co-c*e/T(r.

%S:Lobl(4

CA&:Em+ire

CA&:

4ro"erty, "lant, ande;ui"ment =%)).> =(11> =+).(>In#estments =1.->5uture em"loyee !enefitso!ligations (.*

&eferred credits .*Bood'ill and intangi!les =-$.> =*.$>

 Asset retirement o!ligation %(.(

In#entories&eri#ati#e financial lia!ility7ther .- 1(

.-.

=).)>Trade and other "aya!les *) %.7ther lia!ilities (%% *.)7ther assets =->0oss carry for'ards 1*%6e#enues taa!le net year =(.->E"enses deducti!le in netyear **.+

nreali9ed echange gain =$.%>Ta attri!utesCurrent "ro#isions0ong2term "ro#isions0ong2term de!t/lia!ilities

(.)*.(

1).($%.%

Det deferred ta assets =lia!ilities> =%$+.+> %$% =1)(.)>

=d> Yes, one 'ould e"ect the three com"anies to !e su!8ect to similar income talegislation and ta rates, "articularly 'ith res"ect to federal legislation and rates,

since all three are Canadian com"anies. 7n re#ie' of the schedule !elo', thereare only #ery small differences !et'een the com"anies@ statutory rates and their effecti#e ta rates.

Alime"!(!io"Co-c*e/T(r. Lobl(4 Em+ire

tatutory rate %+.-G %*.G %+.*GEffecti#e rate %$.%G %$.-G %).G

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Kieso, Weygandt, Warfield, Young, Wiecek, McConomy Intermediate Accounting, Tenth CanadianEdition

RA18/9 INTERNATIONAL COMPARISON

Felo', is the schedule of information on statutory and effecti#e income ta ratesfor fi#e com"anies o"erating in the railroad industry, !ut in different countries.

Co-"!r, Je(r e". S!(!-!or,i"come !(xr(!e

Effec!i3ei"come !(xr(!e

&eutscheFahn

Bermany &ec %11 (.)G %.G

East :a"an6ail'ay

:a"an Mar %11 $.)G $.)G

DF Brou" Dor'ay &ec %11 %.G %.G

CanadianDational6ail'ay

Canada &ec %1 1.G %*.G

Dational6ail'ay4assenger=Amtrak>

nited tates e"t %11 ().G G

5rom the a!o#e, most countries in the list ha#e a similar statutory rate of ( ()G, ece"t :a"an that has a rate of $.)G and Canada that has a rate of 1.G,

significantly higher and lo'er res"ecti#ely than the others. The effecti#e rate 'asmost different from Dational 6ail'ay =Amtrak> 'hich decreased to G due to#aluation allo'ance and su!stantial losses from current o"erations for thecom"any.

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