Blue Spruce Corp. reported the following differences between SFP carrying amounts and tax bases at December 31, 2019:
| | | Carrying Amount | | Tax Base |
| Depreciable assets | | $108,000 | | | $72,900 |
| Warranty liability (current liability) | | 18,500 | | | 0 |
| Pension liability (long-term liability) | | 38,600 | | | 0 |
The differences between the carrying amounts and tax bases were expected to reverse as follows:
| | | 2020 | | 2021 | | After 2021 |
| Depreciable assets | | $16,500 | | $14,000 | | $4,600 | |
| Warranty liability | | 18,500 | | 0 | | 0 | |
| Accrued pension liability | | 12,000 | | 11,000 | | 15,600 | |
Tax rates enacted at December 31, 2019 were 32% for 2019, 31% for 2020, 30% for 2021, and 29% for 2022 and later years. During 2020, Blue Spruce Corp. made four quarterly tax instalment payments of $7,500 each and reported income before income tax on its income statement of $111,900. Included in this amount were dividends from taxable Canadian corporations of $4,500 (non-taxable income) and $21,000 of expenses related to the executive teams golf dues (non-tax-deductible expenses). There were no changes to the enacted tax rates during the year. As expected, book depreciation in 2020 exceeded the capital cost allowance claimed for tax purposes by $16,500, and there were no additions or disposals of property, plant, and equipment during the year. A review of the 2020 activity in the Warranty Liability account in the ledger indicated the following:
| Balance, Dec. 31, 2019 | | $18,500 | |
| Payments on 2019 product warranties | | (16,900 | ) |
| Payments on 2020 product warranties | | (4,600 | ) |
| 2020 warranty accrual | | 27,300 | |
| Balance, Dec. 31, 2020 | | $24,300 | |
All warranties are valid for one year only. The Pension Liability account reported the following activity:
| Balance, Dec. 31, 2019 | | $38,600 | |
| Payment to pension trustee | | (72,000 | ) |
| 2020 pension expense | | 60,000 | |
| Balance, Dec. 31, 2020 | | $26,600 | |
Pension expenses are deductible for tax purposes, but only as they are paid to the trustee, not as they are accrued for financial reporting purposes. Blue Spruce Corp. reports under IFRS.
Calculate the Deferred Tax Asset or Deferred Tax Liability account at December 31, 2019.
| Deferred tax Choose the answer from the menu in accordance to the question statement |
| | | $Enter your answer in accordance to the question statement |
Calculate the Deferred Tax Asset or Deferred Tax Liability account at December 31, 2020.
| Deferred tax Choose the answer from the menu in accordance to the question statement |
| | | $Enter your answer in accordance to the question statement | |
Prepare all income tax entries for Blue Spruce Corp. for 2020. (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 |
| December 31, 2020 | | | |
| | | | |
| | (To record current tax expense) | | |
| December 31, 2020 | | | |
| | | | |
| | (To record deferred tax expense) | | |
Identify the balances of all income tax accounts at December 31, 2020, and show how they will be reported on the comparative statements of financial position at December 31, 2020 and 2019, and on the income statement for the year ended December 31, 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
| Blue Spruce Corp. (Partial) Income Statement |
Statements of Financial Position classification:
| Blue Spruce Corp. (Partial) Statements of Financial Position |
How would your responses to (a) and (d) change if Blue Spruce Corp. followed the ASPE future/deferred income taxes method? From part (a) SFP classification:
| Blue Spruce Corp. (Partial) Statements of Financial Position |
From part (d) SFP classification:
| Blue Spruce Corp. (Partial) Statements of Financial Position |
