NIVTI - This machine originally cost $20,000 (many years...

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Net Income Versus Taxable Income Shapiro Ltd. is a small private corporation. For 2010 Shapiro has net income for financial statement purposes of $122,666. A component of net income is “provision for income tax” in the amount of $30,834. This number is an accounting calculation based on net income and does not represent the firm’s actual tax liability. In “other income” (also a component of net income) Shapiro has dividends from a Canadian firm in the amount of $10,000. Shapiro paid $4,000 in interest and $7,500 in dividends. Also included in “other income” is an accounting gain net of applicable taxes in the amount of $8,500 arising from the sale of a depreciable asset.
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Unformatted text preview: This machine originally cost $20,000 (many years ago) and it was sold in 2010 for $30,000. Shapiro reported $10,000 in depreciation for financial statement purposes and had capital cost allowances in the amount of $15,000. Based on current federal and provincial tax rates, determine Shapiros tax liability of 2010 (i.e, the amount that Shapiro actually owes the government). The corporate tax rate on taxable income before capital gains is 13.5% (for active business income less than $500,000). The tax rate on the taxable portion of realized capital gains is 38.5%. Presuming that ABCs 2010 EBITDA was received in cash, find, the change in ABCs cash balance over 2010....
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This note was uploaded on 02/10/2011 for the course BUS 312 taught by Professor Alan during the Spring '03 term at Simon Fraser.

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