On December 31, 20X0, Toms River Rafting, Inc. (TRR), has a deferred tax asset related to a $250,000 net operating loss carryforward. The enacted tax rate (and substantively enacted tax rate) at the time was 21%. When it recognized this deferred tax asset, TRR expected to have sufficient earnings to utilize the loss carryforward. TRR reported pre-tax book income of $100,000 and taxable income of $97,700 in 20X1. However, because of a severe drought, TRR determines at December 31, 20X1, that it is likely the company will only be able to realize half of the net operating loss carryforward remaining at that date.

The difference between pre-tax book income and taxable income in 20X1 relates to a temporary difference for depreciation of property, plant, and equipment that was purchased in 20X1.

At December 31, 20X1, the enacted tax rate is 21%. However, the substantively enacted tax rate is 25%, and it is fully expected that legislation to change the tax rate to 25%, effective in 20X2, will be completed in a matter of days.

Required:

Prepare the journal entries to record tax expense in 20X1 under both U.S. GAAP and IFRS.