HB Company is a private company with a significant amount of long-term debt. The company reports under IFRS. One of the conditions of the debt-financing indenture is that it must provide quarterly financial statements to the lender. HB pays tax at the rate of 25% on the first $200,000 of income and 40% on any income in excess of $200,000. During 20X5, the company earned $500,000 and paid tax at an average rate of 34.545%. Similar results were expected for 20X6.

HB realized the following actual results for the year ended December 31, 20X6 (in thousands):

QuarterIncome (loss)

1$100

2(150)

3 200

4 400

Required:

Calculate income tax expense (recovery) for each quarter in 20X6 and for the year in total under the:

a.discreet approach

b.integral approach