Christina Inc. follows IFRS and accounts for financial instruments based on IFRS 9. Christina holds a variety of investments, some of which are accounted for at fair value through net income and some of which are accounted for at fair value through other comprehensive income. On January 1, 2017, the beginning of the fiscal year, Christina's accounts and records include the following information:

Market values for the FV-NI investments and FV-OCI investments at December 31, 2017 were $58,000 and $75,000, respectively. Computers that are used to track investment performance were purchased during 2017 for $10,000. For tax purposes, assume the computers are in Class 10 with a CCA rate of 30%. Depreciation expense for the year was $2,000. Christina recorded meals and entertainment expenses of $24,000 related to "wining and dining" clients. The CRA allows 50% of these costs as a deductible business expense.
Christina's income before income tax for 2017 is $110,000. This amount does not include any entries to adjust investments to market values at December 31, 2017. Christina's tax rate for 2017 is 25%, although changes enacted in tax legislation before December 31, 2017 will result in an increase in this rate to 30% for 2018 and subsequent taxation years. Assume that these rates apply to all income that is reported. There were no deferred tax accounts at January 1, 2017.
Instructions
(a) Prepare journal entries to reflect the difference between the carrying amount and market value for the above investments at Christina's year end of December 31, 2017.
(b) Explain the tax treatment that should be given to the unrealized gains or losses reported on Christina's statement of income and statement of comprehensive income.
(c) Calculate the deferred tax asset or liability balances at December 31, 2017 and indicate their classification.
(d) Calculate taxable income and income tax payable for 2017.
(e) Prepare the journal entries to record income taxes for 2017.

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Fair value through net income investments Fair value through other comprehensive income investments Cost $60,000 71,000 Market Value $60,000 71,000