Hill Valley Limited (HVL) has been in existence since 2009 and manufactures DeLorean cars. The company has a December 31^st year end and follows IFRS. Their tax history for the last five years is as follows:

Year	Taxable Income	Tax Rate	Taxes payable
2017	$100,000	40%	$40,000
2018	$85,000	35%	$29,750
2019	$55,000	35%	$19,250
2020	$95,500	32%	$30,560
2021	$43,500	28%	$12,180

At the end of 2021, the only timing difference was related to fixed assets. At the end of 2021, the net book value of the fixed assets was $650,000 and the undepreciated capital cost (tax cost) was $585,000. The tax rate in 2021 is 28%.

Part A - 20 Marks

In 2022, and the President of HVL, Dr Emmett Brown was excited as it is the 37^th anniversary of the movie Back to the Future and he expected that sales of the DeLorean cars would hit an all-time high. His Chief Financial Officer Marty McFly has just completed the 2022 financial statements and to his dismay, HVL has actually incurred an accounting loss in 2022. The accounting loss (after deducting depreciation) in 2022 was $785,000. Depreciation claimed was $75,000 and there was $5,000 of interest and penalties on late or deficient taxes. The reason for the loss was that the flux capacitor was faulty and as a result a loss occurred due to the costly repairs required. The company decided not to claim any capital cost allowance in 2022 as a result of the loss. Marty McFly recommended to Dr Brown that the tax loss be carried back to the extent possible to recover taxes paid in prior years. The 2022 tax rate was 30%. The Board of Directors of the company expect that they will have no problem using the losses in the mandatory carry forward period required under the Income Tax Act.

Required: Prepare the journal entries for 2022 to record the current and deferred tax. You may find it useful to copy a deferred tax table(as) to this answer tab.

Part B - 10 Marks

Assume that in 2023, sales of the Delorean skyrocketed. The companys net income before income taxes was $1,500,000 after deducting depreciation of $75,000. There were no fixed asset purchases in 2023. Capital cost allowance claimed in 2023 was also $75,000. The tax rate in 2023 remained at 30%. Management has decided to use the entire loss carried forward in 2023.

Required: Prepare the journal entries for 2023 to record the current and deferred tax. You may find it useful to copy a deferred tax table(as) to this answer tab.