Last year was a challenging one for Charlie$$s Snowboards Inc. $($CSI$),$ a large private company that manufactures snowboards and skateboards. Competition has increased in the industry$$s skateboard segment, and CSI lost significant market share.

It is now January $10,2025,$ You, CPA, are the Controller of CSI. You recently met with Evelyn Dickson, the chief financial officer of CSI, to review the draft financial statements for $2024$ prepared in accordance with accounting standards for private enterprise $($ASPE$).$ CSI$$s tax rate is $20\%.$ Evelyn would like you to address the outstanding financial reporting issue.

Meeting Note with Evelyn

CSI uses the future income taxes method of accounting for income taxes. The company reports future income tax expense for temporary differences arising from property, plant, and equipment; deferred development costs; and warranty liabilities.

As of December $31,2023,$ a future income tax liability of $$230,000$ was reported for property, plant, and equipment; a $$100,000$ future income tax liability was reported for the deferred development costs; and a future income tax asset of $$40,000$ was reported related to the warranty liability. These were determined using CSI$$s $20\%$ tax rate.

During $2024,$ the following changes occurred with respect to the temporary differences:

Capital cost allowance claimed was $$30,000$ greater than depreciation expense recorded for accounting.

Deferred development costs capitalized exceeded amortization of deferred development costs by $$20,000.$

Warranty expense was greater than warranty claims paid by $$40,000.$

CSI$$s tax rate is unchanged.

Instructions

Adopt the role of the company$$s controller and

Explain the causes of ending balance for the future income tax asset $/$ liability as year ended of December $31,2023($i$.$e$.$ opening balance for $2024).$

Explain how the changes will impact the future income tax assets, liabilities, and expense for the $2024$ financial statements.

Calculate the revised future income tax asset$/$liability for the $2024$ financial statements.

Note: Marks are only awarded to the analysis of relevant financial reporting issues.