The Crouse Corporation is a publicly traded company that operates a chain of stores and online websites that sell sports memorabilia. Last year, Crouse’s first year of operations, resulted in an operating loss carryforward of $150,000 for which no deferred tax asset was recognized. The average annual tax rate is normally expected to be 40%.

Required
a. Assume that Crouse Corporation earned $200,000 in the first quarter of this year and expects to earn a similar amount for each of the remaining three quarters. What would be the income tax expense for each quarter of the current year under IAS 34? What would be the effective annual tax rate for the current year?

b. Assume that Crouse Corporation earned $25,000 in the first quarter of this year and expects to earn a similar amount for each of the remaining three quarters. What would be the income tax expense for each quarter of the current year under IAS 34? (Assume that the company believes that it is now very likely that it will earn enough profits to use all of its tax loss carryforward.)