Solway Company has a deferred income tax liability in the amount of \(\$ 200,000\) at 31 December \(20 X 4\), relating to a \(\$ 500,000\) receivable. This sale was recorded for accounting purposes in 20X4 but is not taxable until the cash is collected. In \(20 X 5, \$ 300,000\) is collected. Warranty expense in 20X5 included in the determination of pre-tax accounting income is \(\$ 150,000\), with the entire amount expected to be spent and deductible for tax purposes in 20X6. Pre-tax accounting income is \(\$ 650,000\) in \(20 \times 5\). The tax rate is \(35 \%\) in \(20 \times 5\).

Required:

1. What is the accounting carrying value, the tax basis of the account receivable, and the warranty liability, at the end of \(20 \mathrm{X} 4\) and \(20 \times 5\) ? What was the enacted tax rate at 31 December 20X4?

2. Calculate taxable income and income tax payable, compute the balance in the deferred income tax accounts, and prepare journal entries for year-end 20X5.

3. Calculate the deferred income tax that would be reported on the statement of financial position at the end of \(20 \times 5\).