Refer to E18-5 for Sayaka Tar and Gravel Ltd., and assume the same facts for the fiscal year ending December 31, 2014. For the second year of operations, Sayaka made progress on the construction of the road for the municipality. The account balances at December 31, 2015, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow (the balances at December 31, 2014, are also listed):

20152014

Accounts Receivable..........................$ 105,000......$ 320,000

Construction in Process.........................940,000.........500,000

Revenue from Long-Term Contracts.........440,000.........500,000

Construction Expenses..........................410,000.........350,000

Billings on Construction in Process............390,000.........400,000

Equipment.......................................1,100,000......1,100,000

Accumulated Depreciation-Equipment......460,000.........170,000

Undepreciated Capital Cost.....................620,000.........980,000

Sayaka's tax rate continues to be 25% for 2015 and subsequent years. Income before income tax for the year ended December 31, 2015, was $120,000.

Instructions

(a) Calculate the deferred tax asset or liability balances at December 31, 2015.

(b) Calculate taxable income and income tax payable for 2015.

(c) Prepare the journal entries to record income taxes for 2015.

(d) Prepare a comparative income statement for 2014 and 2015, beginning with the line "Income before income tax."

(e) Provide the comparative balance sheet presentation for any resulting deferred tax balance sheet accounts at December 31, 2014, and 2015. Be specific about the classification.

(f) Repeat the balance sheet presentation in part (e) assuming Sayaka follows IFRS.