Allied Company is a private corporation manufacturing air conditioners. During the year, they have come across the following 2 transactions and they are seeking your advice to respond to these questions: 1. At the end of 2021, Allied reported deferred income tax on loss carried forward of $ 233,000 and deferred tax liability for 2021 as $ 72,000 vs. 2020 for $ 96,000. The deferred income taxes have resulted primarily from temporary differences in the recognition of capital cost allowance (CCA) claimed in excess of depreciation recorded. Management is reasonably certain that the tax benefits of the tax losses carried forward can be realized by claiming less CCA than depreciation. It has therefore reduced the current year’s losses by recognizing the deferred income tax benefit. The average tax rate of the company is 30%. When filing its income tax return for the past five years, the company reported no taxable income as a result of claiming enough CCA to offset its net income. This year, no CCA has been claimed because of the significant loss. Depreciation is calculated at 20% declining balance.