Fall Ltd reports financial income of $$100,000$ for the financial year ending December $31,2022.$ The following

items cause taxable income to be different than pre$-$tax financial income:

Depreciation on the tax return is greater than depreciation on the income statement by $$26,000$

Rent collected on the tax return is greater than rent earned on the income statement by $$17,000$

Fines for pollution appear as an expense of $$1,000$ on the income statement.

Fall Ltd tax rate is $30\%$ for all years, and the company expects to report taxable income in all future

years. There are no deferred taxes at the beginning of $2022.$

Required: According to IAS $12$ Income Taxes

a$.$ Explain how deferred taxation arises $(5$marks$)$

b$.$ Prepare the journal entry to record income tax expense, deferred taxes and income taxes payable for

Clearly label them as deferred tax asset or liability. $(6$ marks$)$

c$.$ Explain the accounting treatment for net operating losses according to IAS $12$ Income Taxes. $(4$ marks$)$