Carly Inc. reported the following accounting income (loss) and related tax rates during the years 2012 to 2018:

Accounting income (loss) and taxable income (loss) were the same for all years since Carly began business. The tax rates from 2015 to 2018 were enacted in 2015.
Instructions
(a) Prepare the journal entries to record income taxes for the years 2016 to 2018. Assume that Carly uses the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.
(b) Indicate the effect of the 2016 entry(ies) on the December 31, 2016 statement of financial position if Carly follows the ASPE future/deferred income taxes method. Indicate as well the effect on the statement of financial position if Carly reports under IFRS.
(c) Show how the bottom portion of the income statement would be reported in 2016, beginning with "Loss before income tax."
(d) Show how the bottom portion of the income statement would be reported in 2017, starting with "Income before income tax."
(e) Prepare the journal entries for the years 2016 to 2018 to record income taxes, assuming that Carly uses the carry- back provision where possible but is uncertain if it will realize the benefits of any loss carryforward in the future. Carly does not use a valuation allowance.
(f) Assume now that Carly uses a valuation allowance account along with its Deferred Tax Asset account. Identify which entries in part (e) would differ and prepare them.
(g) Based on your entries in part (e), indicate how the bottom portion of the income statements for 2016 and 2017 would be reported, beginning with "Income (loss) before income tax."
(h) From a cash flow perspective, can you think of any advantage in using the valuation allowance for financial reporting purposes? Can you think of any advantage in not using it?

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Year 2012 2013 2014 2015 2016 2017 2018 Accounting Income (Loss) Tax Rate 25% 25% 25% 30% 35% 30% 25% $ 70,000 25,000 60,000 80,000 (210,000) 70,000 90,000