Henry Limited had investments in securities on its SFP for the first time at the end of its fiscal year ended December 31, 2023. Henry reports under IFRS and its investments in securities are to be accounted for at fair value through net income. During 2023, realized losses and gains on the trading of shares and bonds resulted in investment income, which is fully taxable in the year. Henry also accrued unrealized gains at December 31, 2023, which are not taxable until the investment securities are sold. The portfolio of trading securities had an original cost of $314,450 and a fair value on December 31, 2023, of $318,200. The entry recorded by Henry on December 31, 2023, was as follows:

FV-NI Investments ...................................... 3,750
Investment Income or Loss ................................... 3,750

Income before income tax for Henry was $302,000 for the year ended December 31, 2023. There are no other permanent or reversing differences in arriving at the taxable income for Henry for the fiscal year ended December 31, 2023. The enacted tax rate for 2023 and future years is 30%.

Instructions
a. Explain the tax treatment that should be given to the unrealized gain that Henry reported on its income statement.

b. Calculate the deferred tax balance at December 31, 2023.

c. Calculate the current income tax for the year ended December 31, 2023.

d. Prepare the journal entries to record income taxes for 2023.

e. Prepare the income statement for 2023, beginning with the line “Income before income tax.”

f. Provide the SFP presentation for any resulting income tax SFP accounts at December 31, 2023. Be clear on the classification you have chosen and explain your choice.