Ayayai Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company obtained a contract to construct a road for the municipality of Cochrane West, and it is estimated that the project will be completed over a three-year period starting in June 2020. Ayayai uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Ayayai uses the completed-contract method allowed by the CRA. For the second year of operations, Ayayai made progress on the construction of the road for the municipality. The account balances at December 31, 2020 and 2021, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow:

		2021		2020
Accounts Receivable		$107,000		$320,000
Asset/Liability (net of billings to date of $792,000 and $400,000)		119,000		100,000
Revenue from LongTerm Contracts		411,000		500,000
Construction Expenses		409,000		350,000
Equipment		1,100,000		1,100,000
Accumulated Depreciation-Equipment		450,000		172,000
Undepreciated Capital Cost		629,000		979,000

Ayayais tax rate was 25% in 2020 and 2021. The enacted tax rate for 2022 and subsequent years was reduced to 20% on September 15, 2021. Income before income tax for the year ended December 31, 2020, was $195,000 and for December 31, 2021, was $121,000. Ayayai reports under IFRS.

Prepare the journal entry to record the effect of the change in the enacted tax rate. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
September 15, 2021	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

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List of Accounts

Calculate any deferred tax balances at December 31, 2021.

Deferred tax select an option assetliability

$enter a dollar amount

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List of Accounts

Calculate taxable income and income tax payable for 2021.

Taxable income		$enter a dollar amount
Income tax payable		$enter a dollar amount

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List of Accounts

Prepare the journal entries to record income taxes for 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title to record current tax expense	enter a debit amount	enter a credit amount
enter an account title to record current tax expense	enter a debit amount	enter a credit amount
(To record current tax expense)
enter an account title to record deferred tax expense	enter a debit amount	enter a credit amount
enter an account title to record deferred tax expense	enter a debit amount	enter a credit amount
(To record deferred tax expense)

eTextbook and Media

List of Accounts

Prepare a comparative income statement for 2020 and 2021, beginning with the line Income before income tax.

Ayayai Tar and Gravel Ltd. Comparative Income Statement (Partial) choose the accounting period For the Year Ended December 31For the Month Ended December 31December 31
		2021		2020
select an income statement item Net Income / (Loss)Income Tax Expense - CurrentDeferred Tax AssetIncome Before Income TaxIncome Tax Expense - DeferredCurrent Income Tax BenefitDeferred Tax Liability		$enter a dollar amount		$enter a dollar amount
select an income statement item Net Income / (Loss)Income Tax Expense - CurrentDeferred Tax AssetDeferred Tax LiabilityIncome Before Income TaxCurrent Income Tax BenefitIncome Tax Expense - Deferred		enter a dollar amount		enter a dollar amount
select an income statement item Deferred Tax AssetIncome Tax Expense - CurrentNet Income / (Loss)Current Income Tax BenefitIncome Before Income TaxDeferred Tax LiabilityIncome Tax Expense - Deferred		enter a dollar amount		enter a dollar amount
		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts
select a closing name for this statement Deferred Tax LiabilityIncome Tax Expense - DeferredNet Income / (Loss)Current Income Tax BenefitIncome Tax Expense - CurrentIncome Before Income TaxDeferred Tax Asset		$enter a total net income or loss amount		$enter a total net income or loss amount