Alpha Co is a furniture manufacturer. The finance director of the company is preparing the 2017 annual financial statements and has collected the following information with respect to the accounting for income taxes. Pre tax financial statement profits: $900,000 Tax rate for 2017: 25% The finance director needs to consider a number of issues which can possibly result in differences between the 2017 profit for financial statement reporting purposes and the 2017 profit for tax reporting purposes i. ii. iii. iv. Property, plant and equipment include an asset that cost $100,000 when it was purchased. As of 31 December 2017 this asset was charged with $40,000 of depreciation expense and the company has claimed total tax allowances on the asset of $70,000. On 31 December 2017, the asset was impaired for $20,000. The company wrote down its inventory by $10,000 to a net realisable value of $25,000. The reduction taken into account for tax purposes when the inventory is sold. Trade debtors have a carrying amount of $50,000. The related revenue has already been included in taxable profit Current liabilities include accrued expenses of $18,000. This amount is deductible for tax purposes on a cash paid basis The company capitalised $200,000 research and development on 1 January 2014 and estimated that its useful life is 5 years. The research and development expenditure is wholly revenue in nature and is tax deductible in the year incurred. For financial accounting purposes the company uses the straight line depreciation method Required: (a) Calculate the DEFERRED TAX BALANCE as at 31 December 2017 (17 marks) (b) Calculate for 2017 the DEFERRED TAX CHARGE that Alpha Co. will report on its statement of profit and loss in relation to the capitalised research and development expenditure. (3 marks)