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JD Corporation has income before tax of $800000. Included in this amount are meals and entertainment...

JD Corporation has income before tax of $800000. Included in this amount are meals and entertainment amounting to $9000, warranty costs of $100000 ($65000) in warranty claims), depreciation $94000 and dividends from a taxable Canadian Corporation of $15000. CCA for the year amounted to $90000 and then the tax rate is 40%. Calculate Income Tax Expense

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Answer #1
JD Corporation Canada
Particulars Amount
Income Before tax 800000
+ Meal & entertainment 9000
- Meal & entertainment(Only 50% allowed as deduction ) 4500
+ Warrant cost 100000
- Warrant cost(Actual Incurred is deductable) 65000
+ Depreciation(Allowed as per Accounting) 94000
- Capital Cost Allowance(CCA)(Allowed as per income tax) 90000
- Dividend(Income Taxed on gross up basis with dividend tax credit) 15000
828500
Incoe tax rate@40% 331400
Net Profit 497100
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