simplified what are permenanet and temporary differences and do you add or subtract it

Question 1

Golf club dues

Answer 1

add

permanent difference

Question 2

warranty expense

Answer 2

add

temporary difference

Question 3

warranty costs paid

Answer 3

subtract

temporary difference

Question 4

depreciation (amortization)

Answer 4

add

temporary difference

Question 5

CCA

Answer 5

subtract

temporary difference

Question 6

how do you calculate the tax basis for warranty

Answer 6

you don’t it is always zero

Question 7

how do you calculate the accounting basis for warrnaty

Answer 7

use the T account

Question 8

how do you calculate the tax basis for capital assets

Answer 8

CCA - take the original amount less accumulated CCA

Question 9

how do you calculate the accounting basis for capital assets

Answer 9

Depreciation - original cost - accumulated depreciation

Question 10

what account do we use for warranty or capital assets for journalizing purposes

Answer 10

DIT - warranty
DIT - capital assets
DIT = differed income tax

Question 11

what account do you use for the income tax payable

Answer 11

income tax payable

Question 12

what account do you use when you are having a refund of taxes

Answer 12

income tax receivable

DIT - Loss carry forward or (LCF)

Question 13

what account do you use for the balance of items (plug account)

Answer 13

provision for income tax

Question 14

how far can you carry back a loss

Answer 14

3 years

Question 15

how far forward can you carry a loss

Answer 15

20 years

Question 16

when deciding how far back to apply a loss what do you need to consider

Answer 16

1. if we are going to have a loss in the next year, go back the 3 years for sure
2. this is the usual method
3. if we decide we want to look at what is the most beneficial (give us the most refund) we look at the tax rate. the highest tax rate is best

Question 17

if you have a loss in that year do you calculate a taxable income

Answer 17

no, because you can’t have a tax payable of -. it can only be zero

Question 18

can you decide how much CCA to use at any time

Answer 18

yes, if you have a loss you might not want to use any CCA